Actually, Google's ultimate ambition might be far more expansive that even an unseating of Microsoft as undisputed owner of the PC operating system space. The secret dream may be a complete domination of all devices with embedded computers. That's pretty much everything there is electronic, isn't it?
The news that suggests Google is moving beyond controlling the information search environment and looking to run the whole machine is that PC makers, including Hewlett-Packard, are testing Google's Android operating system for use in netbook products. Up until now, Android has been seen as an operating system for mobile phones. Something that runs a cellphone can't possibly pose a threat to the massive and entrenched PC operating systems, can it?
Perhaps it can. If it does, it will happen in a similar way to how Microsoft unseated the computing giants IBM, DEC, Data General, Control Data and others to become the big name in business computing, and wiped the slate clean of all competitors, save Apple, in personal computing. What Bill Gates did that was both prescient and game altering was to become the PC operating system provider to IBM at a time when PCs didn't seem much of a threat to the status quo. Only in hindsight can we say, "they should have seen it coming."
The key is in the timing. Microsoft established itself at the inflection point where personal computers were poised to take over the corporate desktop from dumb terminals and become an affordable data processing solution for small and home businesses. Now that the standards of business and personal computing primarily revolve around Microsoft Windows, there's a massive barrier to entry for anyone who seeks to offer an alternative.
We are nearing such an inflection point again. You see the "clouds" gathering - literally. Computing is poised to move off the desktop and onto the Internet, with software as a service rather than a product. There's really no reason you need to do processing or storage locally. It's a matter of becoming convinced that the reliability, security, performance and price make the cloud computer a better alternative to the personal computer.
The netbook, more than the smartphone, represents a move to this new business model. Although, the day may not be far off when the line between computer and phone is so blurred you really can't tell the difference. For some early adopters, the Apple iPhone is well down that path. Netbooks seek to give you a cheap, lightweight, and small mobile computer without losing the power of the computer. They do that by moving functionality online so that they can shed things like CD drives, power sucking high performance processors, and massive hard drives.
The client-server model stopped the move to decentralized computing in major corporations years ago. Cloud services pretty much extend that model beyond the corporate walls by using the Internet as a LAN replacement. As business WAN bandwidth becomes cheaper, there's really no reason why netbooks, and perhaps the desktop equivalent of thin clients, can't become the new standard. Of course that can't happen overnight... or can it?
