TechCrunch editor Michael Arrington recently was interviewed by Charlie Rose for a chat about the latest news and events in technology. Michael gave his take on the Google vs. Microsoft rivalry, saying that each tech giant is going after the other’s core businesses. Michael also touched upon the latest news around the CrunchPad and Apple’s much hyped and potentially similar product, the large form iPod Touch, which is reported to hit the market in early 2010.

Of course, Rose unsurprisingly delved into the whole Twittergate controversy, which Michael gave a lot more insight into, including the discussions with Twitter and the ethical decisions he faced in his decision and why he published the documents. Michael also weighed in on mobile social mapping startup Loopt, the iPhone, the Palm Pre (which he says is a “great phone”) Facebook’s viability as a money-making enterprise and more. Read below for the full transcript of the interview. You can see Arrington’s other Charlie Rose appearances on Crunchbase.

Video and full transcript after the jump.

It seems like I’ve heard that title somewhere before. Oh yeah, almost exactly. So this time a guest at our party last week decided to corner Chandra Rathakrishnan, the CEO of our CrunchPad partner Fusion Garage, and talk him into doing this ridiculous “unboxing” of the CrunchPad. The video went up and the blogosphere went wild, just like last time.

The video has now been removed from YouTube.

This was not a sanctioned or official video, nor is it even very interesting. It’s just the last prototype being taken out of its box (which should be sort of obvious, pictures of the prototype in the video have been circulating since April). It’s certainly not the launch prototype, pictured here, which doesn’t actually exist yet.

The only official information on the CrunchPad at this point is in the blog post I wrote a couple of weeks ago, and you can send an email to crunchpad@techcrunch.com for various updates. We’re planning an event in July to give more information. Until then, I hope we’ve seen the last of these ridiculous fingerprint smudged “unboxing” videos.

We’ve been working hard behind the scenes on the CrunchPad since our last update in April, and have just about nailed down the final design for the device. We’re showing the conceptual drawings here today. In another few weeks we’ll have the first working prototypes in our office.

This launch prototype is another significant step forward from the last prototype. The screen is now flush with the case and we’ve decreased the overall thickness to about 18 mm. The case will be aluminum, which is more expensive than plastic but is sturdier and lets us shave a little more off the overall thickness of the device.

I believe the device now actually looks better than the original concept design we published last summer. Compare the images below to the first prototype and you can see how far we’ve come. If you’re interested, here’s Prototype B. Pictures of Prototype C, which is the device we’re actually demo’ing to people now, are here.

More images below:

A little background for those of you who haven’t heard of the CrunchPad: This is the post that kicked off the project. I wanted something I couldn’t buy, and found people who said it could be built for a lot less than I imagined. The goal – a very thin and light touch screen computer, sans physical keyboard, that has no hard drive and boots directly to a browser to surf the web. The operating system exists solely to handle the hardware drivers and run the browser and associated applications. That’s it.

The key uses: Internet consumption. The virtual keyboard will make data entry a pain other than for entering credentials, quick searches and maybe light emails. This machine isn’t for data entry. But it is for reading emails and the news, watching videos on Hulu, YouTube, etc., listening to streaming music on MySpace Music and imeem, and doing video chat via tokbox. The hardware would consist of netbook appropriate chipsets (Intel Atom or Via Nano), at least a 12 inch screen, a camera for photos and video, speakers and a microphone. Add a single USB port, power in and sound out, and you’re done. If you want more features, this ain’t for you.

Price? it can be built for less than $250, including packaging. Add in fixed costs and other stuff you have to deal with (like returns), and you can sell it for $300 and probably not go out of business. Physical design is important, and the software is the key to winning.

We stumbled through an initial prototype that barely booted, but we finished it in a month. Prototype B was much more impressive and usable. That effort was led by Louis Monier, with software developed by Singapore-based Fusion Garage and industrial design work by by David Yarnell and Greg Lalier from Dynacept.

Anyway, we’ve continued to tinker with the project, which is referred to as Mike’s Science Project internally (or, “that thing”). But we certainly aren’t ready to talk about anything more at this point. But we did meet with Fusion Garage again today to test out the most recent prototype (B.5?). This is a significant step forward from Prototype B because the software stack is now entirely customized. The last version had a full install of Ubuntu Linux with a custom Webkit browser. This version has a bottom-up linux operating system and a new version of the browser. We also switched from Via to the Intel Atom chip. The total software footprint is around 100 MB total, which is a solid achievement. Also, this time the ID and hardware work was driven by Fusion Garage out of Singapore.

In fact, all the credit should go to Fusion Garage. But frankly we weren’t planning on talking about it at all, it just isn’t the right time yet. But, to make a long story short, someone accidentally published some photos we took to the web.

It’s time for an update on the progress we’ve made on the low cost touch screen tablet that I first wrote about in July 2008 when I asked for a dead simple touch screen web tablet that boots right to the browser. Here’s our first post on the tablet, which we’re now calling the CrunchPad internally.

The idea is to get a new type of device into people’s hands for as cheap as possible (we were aiming for $200, it looks like $299 is more realistic). It fits perfectly on your lap while you are sitting in front of the TV, so you can look up stuff on Wikipedia or IMDB as you channel surf. It plays Flash video flawlessly so you can watch movies and TV shows on Hulu or Joost or wherever. Or listen to music on MySpace Music. Or use TokBox to have a video chat with your parents. Then check email and call it a day. Facebook, MySpace, YouTube, Hulu, Wikipedia, Google Docs and Gmail are the killer apps for this device.

Because the device skips the resource-sucking parts of the operating system and focuses on one application – the browser – very low end hardware can be used and still give users a desktop-like Internet browsing experience.

Update on the TechCrunch Tablet: A humble (and messy) beginning. Prototype A has been built. It’s in a temporary aluminum case that a local sheet metal shop put together for us that’s at least twice as thick as it needs to be, but the hardware has been defined and is nearing lockdown. We booted the machine in the case for the first time today, accessed the Wifi network and were able to navigate a web page via the touch screen.

Most of the work is transitioning to software and UI, and real industrial design work on the case is beginning.