Google is going to produce its own operating system. This news is enough to warm a geeks heart! From what I gathered at the Google blog the OS Kernel will be Linux while Google will come up with its own window manager. This is a bit like Apple using BSD for it Kernel and Aqua for its window manager.
I thought that this line was interesting and sums up Googles intent.
For application developers, the web is the platform. All web-based applications will automatically work and new applications can be written using your favorite web technologies.
Google has nothing to loose. While Windows I think will not immediately see its market share erode rather over times its revenue streams. Google will be pushing developers to develop apps which will be more and more web based so the OS really doesn't matter. What convinced me of this was seeing Photoshop elements working on a web based system.
What they are doing is lowering the cost of computing so more people will be on the net, thus be exposed to Google.
For basic computing I think a Chrome system will suffice, but for games, mmmm.
Because of my tinkering with Linux I wonder if it really will be built from the ground up. Or will it be based on a debian .deb or even Red Had .rpm. Will it be able to run Open office. I'm sure the source code will reveal all when it is out.