In case you missed it, there has been a major shift in the tectonic plates of the software war brewing between Microsoft (MSFT) and Google (GOOG). 

As Microsoft spent the summer in search of Yahoo! (YHOO), GOOG was biding its time and preparing to launch a direct assault on Microsoft’s business.  This week, GOOG unveiled its next-generation web browser that will directly take aim at Microsoft’s popular Internet Explorer. 

This is a big deal people! 

Despite ardent denials from Google management, we have all known for years that GOOG would be a very direct threat to MSFT dominance—especially when it comes to web browsing. By making so much money in search, it was only natural that Google would spread its wings to take on the monopolistic behemoth that we all know as  Microsoft. 

Historically, companies that have chosen to take on Microsoft have not had much luck.  In fact, many that gave it a go, simply no longer exist! Microsoft is notorious for ruthless competition, and trust me, they will not enter into battle with Google lightly.

A prime example can be seen as recently as last May when Microsoft went after Yahoo. Unfortunately for investors, the staid MSFT failed in its attempt to pry Yahoo away from its dedicated shareholders. (See, “Yahoo Lays an Egg“). Now, Microsoft wants to go after GOOG at its core. This time, they plan on taking a slightly different approach by acquiring smaller competitors while focusing its own growth by broadening its internal search capabilities. 

Could it be that MSFT is distracted?  It’s possible. But I can bet that the release of GOOG Chrome will be a big wake up call for the tech leader!

Google Polishes Superior Search Capability

The new browser is already generating buzz. Some seem to like it, and others are not so impressed. Regardless, with a legion of dedicated users, it won’t take much for Google to make a huge impact here.  I, for one, can think of many benefits to using the new Chrome versus Internet Explorer. Hey, if I can become more productive on the Internet as a result, you can bet that I’ll never look back!  And this is the entire business goal of Google: Simply make the Internet more productive for its users.  It may seem like a simple mission, but that simplicity packs a powerful punch! 

Indeed, MSFT has plans of its own to improve its IE in a way that would be quite detrimental to GOOG search business. Essentially, it plans to disguise user trends in a way that would make it difficult to accurately track for advertisers use.  Sure, that could put a wrench in GOOG’s business but I’m not worried. With Chrome, Google has a clear plan for attacking Microsoft dominance and has already demonstrated an ability to compete effectively.   

I recommended GOOG to my Rational Investor readers back in 2005.  My target at the time was $700. The stock reached a high of almost $750 before falling back this year.  At the current price of $460 or so, GOOG is still a cheap buy in my Rational opinion. 

There is so much more meat on the bone for GOOG should they win the search battle.  They seem to have a better than 50-50 chance of succeeding.  If so, shareholders of GOOG will benefit greatly.  It seems like a risk worth taking at these levels.

This article was written by Jamie Dlugosch, contributor to InvestorPlace.com. For more actionable insight likes this, go to: www.InvestorPlace.com.