Google has achieved an incredible status as the amazing company that can do no wrong. Even the most minor things they release are heralded by mainstream media and computer nerds everywhere. They're going to release a perfect, free GoogleOS with your data everywhere that makes Windows useless and solves all of our problems. Google will take over the industry and free us from Microsoft's shackles.

Right?

Well, not exactly. I hate to be the bearer of bad news, but Google is not releasing a consumer OS. They're also not going to make Microsoft (or "M$" if that's what you're into) go out of business.

Making operating systems is not a glorious or easy business. The role of a modern desktop operating system is to simultaneously pull off the following:

1. Abstract a bunch of nasty manual hardware functions behind clean, simple, automatic interfaces for users and programmers.
2. Provide such support for all sorts of hardware, old and new, because the manufacturers probably won't do it themselves. If Windows Vista doesn't support a customer's awful Visioneer scanner from 1996, he'll make a very angry phone call, but not to Visioneer.
3. Run all sorts of software, including applications which depend on bugs in previous versions of the operating system.
4. Present an attractive, easy-to-use interface to the user that protects them from complex details - unless they're power users, who will flame you if you do this. Many people think they're power users when they really aren't, so you have to find a balance that won't anger the real power users but won't let the fake ones cause too much damage.
5. Make all of this work for every country, in every language. Accommodate right-to-left text, non-Roman character sets, number formatting (i.e. 1.000 instead of 1,000), timezones, and time/date formatting (i.e. 1:00 PM or 13:00, 1-30-06 or 2006-01-30). Ensure that every system dialog box and window will look right under every combination.
6. Properly accommodate for users without perfect hearing, sight, or fine motor skills, even when application writers won't.
7. Don't break under unexpected extremes, such as a user setting all system text to 72pt Wingdings or making the taskbar fill half of the screen - the left half.

Now, let's see what Google does:

1. Index and search web pages.
2. Maintain a handful of simple online applications.
3. Sell a lot of advertising on other people's websites, Google search result pages, and Google web apps such as Gmail or Maps/Local.

There's not much overlap.

Microsoft is a really big company with a lot of money and solid dominance in many saturated markets with huge barriers of entry. They simultaneously maintain tons of different products in many different markets, and they employ far more people and have far more money than Google to pull it off.

But we'll set all of that aside for a minute. What if Google actually did it? What would they get? A huge support nightmare and a drain on their resources. Even Microsoft doesn't want to make operating systems very often. To Microsoft, the operating system is only worthwhile because it allows them to use it as a gateway to sell their other products, services, and content. Google could certainly gain from that, but they've done very well without it, and it wouldn't be worth the massive (and continuous) investment required for them to enter the market.

Google's web applications, such as Gmail, reduce the need to use a particular operating system. Why would they enter a market that they're commoditizing?

Sorry, but there won't be a Google desktop OS. It just doesn't make sense for Google to create one.