In the third quarter, a little-known Swedish software company plans to release a free operating system with the potential to radically alter the economics of software development. If successful, Xcerion could erode the power Microsoft derives from controlling the desktop, beat Google at its software-as-a-service play, and make commodity Linux boxes more viable as a platform for the masses.

"What Skype did for telephony, we want to do for software development," says CEO Daniel Arthursson. "We're enabling the 'long tail' for business software."

	Arthursson's luring developers with financial incentives

For five years, Xcerion has been working on an XML-based Internet operating system, XIOS, that runs inside a Web browser. It's an abstraction layer that sits on top of a true operating system like Linux, Mac OS X, or Windows, just like Transmedia's Flash-based Glide Next media sharing environment.

But XIOS isn't simply an interface for media sharing. Rather, it's a complete XML-based operating system and development platform that replicates the desktop computing experience from inside the browser and adds the benefits of cloud-based computing, making applications and data available over the network.

Watch it in action and you'll see the threat it poses to Windows: Double-click on XIOS and the familiar desktop interface appears inside the browser window. Expand the browser window in full-screen mode and the Windows desktop vanishes beneath it. Of course, the XIOS environment could just as easily look like the Mac OS desktop or something else entirely. This is what Microsoft feared Netscape would do--turn its main asset, the operating system, into middleware.

WHY DO IT?
There are several reasons to run an XML-based operating system in a Web browser: security, data portability, freedom from hardware and platform lock-in, cost, built-in collaboration, and development productivity.

XIOS should be immune to most malware because it runs in a sandbox, a virtual environment where code can be executed without risk to computing resources on the outside. Because XIOS is based on XML, it's extremely portable and compatible. Applications can be easily tied to back-end XML Web services created with .Net, Java, or other Web technology. With XIOS running in a Web browser, users can access their files from any computer with an Internet connection and compatible browser, regardless of platform. The operating system has to be downloaded, but it's a small file--only 2 Mbytes.

As an operating system, XIOS can operate offline, storing files and running applications locally on a virtual hard disk. XIOS can be toted around on a USB flash drive with, say, Firefox, and every computer you plug it into becomes your computer, with your files.

The flexibility to store files locally or in the Xcerion cloud should enhance XIOS's appeal to businesses unwilling to trust application service providers with their data.