Multiple operating systems already run on Intel processors, including Windows, Apple's Mac OS X, and Linux. Intel gave its Moblin OS to the Linux Foundation and has been working with the foundation to develop Moblin for handheld devices. Intel is also reportedly working with Google to put its Android mobile operating system on handhelds.

While the news of Intel's involvement in the Chrome OS may not be a threat to Microsoft's dominance of the PC market and its efforts to be the OS of choice for handhelds, the software giant isn't likely to be pleased that Intel has encouraged competition.

Google's open-source, Linux-based Chrome OS is initially targeting netbooks. It will run on both x86 Intel and ARM chips, and Google is working with manufacturers Acer, ASUS, Freescale, Hewlett-Packard, Lenovo, Toshiba and others to bring netbooks to market with the Chrome OS, which stresses speed, simplicity and security.

Intel's efforts to support multiple operating systems and smaller devices shouldn't be a surprise to Microsoft or others. Gartner has predicted PC sales will fall 11.9 percent this year, and Intel needs to encourage new markets outside its traditional PC focus. Netbooks are a growing market, as are handheld devices from mobile phones to music players.

In March, Intel announced a memorandum of understanding under which customers of Taiwan-based chip foundry TSMC will can produce customized designs of Intel's Atom chip for embedded applications. Intel Executive Vice President Sean Maloney told financial analysts at the time, "I believe as we look forward to the next three to four years, more and more customers will need to embed full PC functionality into their devices."

The agreement with TSMC lets Intel compete with rival ARM, which has many processor -design customers that rely on TSMC to produce customized devices.

Besides netbooks, Intel believes the package size and low-power envelope of its Atom chips make them ideal for in-car infotainment systems, eco-technology devices, and next-generation media phones capable of delivering communication services over IP. To be successful in these new markets, the chipmaker will need to focus on optimizing power use for devices that run off batteries.