What Exactly is Google up to?

I just read this and this about Google. Looks like Microsoft's worst fears may be coming true, with Google seemingly building all of the infrastructure to allow a computer user to do pretty much everything online that they now do locally: An Office suite, including Outlook functionality, and seemingly unlimited storage space.

The idea of computers becoming more like dumb terminals, with all applications and data stored elsewhere is not new, of course. In fact, prior to the personal computer that is the way computers worked. But the 25+ year reign of the PC made complete sense, especially with the very limited bandwidth of accessing anything external to the user's personal network. But if communication speeds continue to increase, especially on the wireless front, then a great case can be made to store everything centrally, as opposed to little "islands" of data here and there.