Rumor: Google Building a Touch Screen Chromebook

Google (NASDAQ: GOOG) is rumored to be developing a new touch-enabled Chromebook.According to DigiTimes, the new 12.85-inch device will be manufactured by Taiwan-based Compal Electronics. Wintek will supply the touch panels for the laptop, which could ship before the end of 2012.No other information has been provided, but it seems likely that this laptop would cost more than the $249 Chromebook that Google has been heavily promoting in the United States. Regardless, it could still prove to be the least expensive laptop of its kind.Windows 8 is currently available for more than a dozen specially designed laptops that take full advantage of its touch capabilities. Most of them are fairly expensive, retailing for upwards of $700. Sony (NYSE: SNE) currently sells a 13-inch Intel (NASDAQ: INTC) Ultrabook with touch for $1,299.There are a few cheaper options, of course. Asus has built an 11.6-inch laptop that retails for $499, making it the cheapest touch screen laptop available. Google could feasibly undercut that price by a couple hundred dollars. But if not, the company should still be able to get away with charging no more than $349 for a touch-enabled Chromebook.It is not yet known how the existing Chromebooks will affect the rest of the PC industry. For the past two decades, consumers have stuck with Windows and Mac OS. Google hopes to change that.Chrome OS OverhaulIf Google wants to build a touch-enabled Chromebook, it might need to overhaul its Web-based operating system, Chrome OS.Unlike Android, the current version of Chrome OS was not designed with touch screens in mind. It is a light but traditional operating system with built-in programs, such as Gmail and the Chrome browser. Touchpad users will have no trouble clicking on the smaller items, such as tabs and program icons. But they could be much more difficult to click on with a finger, as they were not designed to be touched by anything except a cursor.This becomes instantly apparent when using the desktop mode in Microsoft's (NASDAQ: MSFT) Windows 8. Users can fully navigate both modes (desktop and the new user interface) with a touch screen. But the new UI -- once known as Metro -- is so much more intuitive. It was tailor-made for touch screens, tablets, hybrids and other finger-friendly devices.Google may have to develop a similar OS if it wants to build a touch-enabled laptop. Other Challenges AheadWhile some manufacturers are content to produce a standard touch screen laptop, many are opting to create more advanced devices. Dell (NASDAQ: DELL), Lenovo and Hewlett-Packard (NYSE: HPQ) are just a few of the firms developing a so-called convertible laptop. These notebook/tablet hybrids allow the user to flip, twist or remove the screen to use as a tablet.Convertibles are much more intuitive than traditional touch screen laptops because the keyboard can be removed or pushed out of the way. But they are also much more expensive to design. This could provide a new obstacle for Google, which may not be able to build a convertible without increasing the price by a significant margin.Follow me @LouisBedigianBZ