Google announced an OS based on Chrome, this is supposed be a seperate OS than Android, which is already shipping on smartphones and has been ported to netbooks.
The Chrome OS is also based on open source LINUX code, and Google plans on freely distributing the OS. This can’t make Microsoft very happy.
One of the exisiting theories is that Chrome is the first componet of a Google OS. Chrome is supposed to be the interface to the applications. If you look under the hood of Chrome, it is built more like an OS than a browser.
All it will need is a thin layer to access the hardware (boot, and then interface with video/storage/audio/periferal I/O(USB for a start)/network interfaces) and it’s pretty much good to go.
This would a thin client model with most of the applications out in the cloud, and as much of the data. as well.