The custom firmware integrates some of the functions of a boot loader, so it's a bit more robust than a traditional BIOS. During the seven-second boot time, the firmware loads a series of kernel modules, all of which are signed; if the signature check fails at any point in boot-up, the machine will prompt the user for a reboot, after which a clean version of the OS is downloaded and the entire device is essentially re-imaged...
In my comments above on how ChromeOS works, I described user data as "locally cached"—with ChromeOS, all user data lives in the cloud. A ChromeOS device presumes that the canonical version of your data is the cloud version, so it caches this data locally for faster access, and when a user modifies it, the changes are invisibly written back out to the network. What this means in practical terms is that, while ChromeOS has a filesystem of some sort, you'll never see it. I, for one, couldn't be more thrilled...
Google will obviously target Intel-based netbooks at launch, but Pichai confirmed that the company will also target ARM. This was predictable, because ARM will probably make a better hardware platform for Chrome OS than Atom, especially when Cortex A9 hits the scene. The battery life will be better and, most importantly, the cost will be lower. I think it's possible that we'll see an ARM-based Chrome OS portable for $200 sometime next year. A combination of a $200 price point and all-day battery life may well put the device over the "it looks like a netbook but does less.. heck, I'll buy it anyway" threshold described above.
The first paragraph above might be the most important for schools. I've become convinced that growth in computer adoption in US schools is bottlenecked on support for each computer as an individual soup of applications and data sitting on a hard drive inside a computer that must be managed as an individual device -- as a managed PC. There was a window where thin clients were potentially a large-scale solution to this problem but as far as I can tell they've been swamped by multimedia on one hand and netbooks on the other.
But the answer is not just "Hey, store everything in the cloud." There has to also be changes in the design of the client to make it more robust, fool-proof, and, essentially, capable of being re-flashed to a default working state in minutes, as a ChromeOS apparently will do automatically. If nothing else, ChromeOS should challenge the hegemony of the "managed PC," its fundamental insecurity locked down by layers of Active Directory, anti-virus, technical servants, etc. To the end user, the result may be similar -- a fairly limited device -- but instead of a complexly crippled full PC OS, you'll have a simple, clean one.
I would just add the capability of running different OS images off USB keys to allow non-web apps to be run off their own stripped down (but non-Chrome) OS images (OK class, pop in your Sugar stick and reboot...).
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