Eric Schmidt

In Google's second quarter earnings call this afternoon, Eric Schmidt discussed the importance of the company's recently introduced Chrome OS by saying "you don't change the world incrementally."

Schmidt said the new product -- a direct attack on Microsoft's core business -- is a way to rethink the operating system.

"We need faster operating systems, for the same reason we need faster browsers," he said. "People are now doing everything on the Web and this will be an operating system built around the ubiquity and the power of the Internet."

Schmidt also said the company is talking to PC hardware manufacturers to design exciting products around Chrome OS that "really fulfill the vision of cloud computing."

"Other aspects of our strategy are still to be worked out, based on the feedback and so forth," he said. "Our primary focus with that product will be speed, and in particular speed of boot and speed of computation and seamless use of all the Web services that are the promise of cloud computing."

He said they are still trying to sort out whether the software would be available for download and run on existing hardware.

"Because it is open source, we wont have the kind of restrictions that other people have and it will be very profitable for people to take it and do almost anything they want to, which is another one of the great benefits of Chrome OS," he said.