Summary
Google has at last announced their intentions to move into the operating system space, setting their sites directly on Microsoft. Google is cutting off Microsoft first in the netbook space, the one area of the PC market that has been showing healthy growth. In time, Google's Chrome OS will force Microsoft to change how they compete in their bread-and-butter corporate Windows / Office market as well.
Analysis
I agree completely. And this is exactly what Google seems to be doing...
If you'll notice, Google dropped the "beta" tag from Google Docs and Gmail this week, and they are doing a lot to polish their premium paid for "Google Apps" offering to businesses.
Google is very clearly looking to fill in the support gap that makes many business wary of consumer and open source products.
It will take them time, a long time actually, to start eating away at the areas where Microsoft is already strong. But what they are doing very effectively is cutting off the areas where Microsoft has potential for growth.
MIcrosoft is certainly not going to die overnight, but the future is looking pretty bleak and unpleasant.
In particular, Microsoft's pricing model is starting to change out from under them. Microsoft primarily sells a product (Windows, Office, Exchange). Google is going to undercut them by giving the product away for free, and instead generate revenue via premium paid-for services and support, and via advertising.
