When Sun first fielded Java, it was 'just' a programming language. Then Sun expanded it into a 'platform' by adding other layers of software to the Java core.
It seems that Google is embarking on a similar path. In addition to providing a search engine, Google is now offering Web mail. It acquired photo-storing/sharing vendor Picassa. And in the not-too-distant future, Google could add a browser to its repertoire, as well....
Microsoft's focus on Google could become even sharper if rumors pan out regarding Google's intent to become a browser purveyor. The company has registered the 'Gbrowser.com,' 'Gbrowser.net' and 'Gbrowser.org' domain names. And if you piece the clues together, as some company watchers are doing, the Google browser won't be any old browser. It will be more of a development and operating environment, allowing users to work offline as well as online. Some might even go so far as to call it a 'platform.'
...My bet? While Opera, Safari and Firefox seemingly weren't enough to convince Microsoft that the company should find a way to swallow its antitrust arguments and release a new version of IE, Google's entrée into the market might be. I wouldn't be surprised to see Microsoft release some kind of stripped-down browser (IE Lite, though they won't call it that) some time in the next year-plus.
This is very familiar to anyone who remembers Netscape Constellation (1996, almost 10 years ago!). Constellation incited Microsoft to crush Netscape forever. Now the hand of Netscape is thrusting out of the grave. Microsoft will need to redouble their efforts to acquire or destroy Google.
Mary Jo Foley also notes that Microsoft has decided that it will fight hard to keep closed their networking communication protocols. In other words they have declared that the "lock-in" between their desktop and server solutions is critical to their business models.
Between Google and Linux Microsoft's paranoia must be working overtime. Of course a few billion dollars and an armada of lawsuits should suffice to defeat both of these enemies. (The only real concern is China. If China decided that it needed Linux as a matter of national security, that might be hard for Microsoft to overcome.)