The Google PC and Positioning and all that

News sites are starting to hot up with rumours that Google may launch a low cost PC as early as this week.

Mary Jo Foley's 'Microsoft Watch' column titles the story ' Microsoft's Worst Nightmare Poised to Debut?' and has this to say about the news:
Google is rumored to be planning to roll out some sort of Google PC on Friday. It's not clear what will power the low-cost machine, but it won't be Windows. We're betting the long-rumored Google OS and/or Gbrowser could be part of the package. Others have tried the low-cost approach to knock the Redmondians off their desktop-OS-monopoly pedestal, but no one's succeeded so far.

If true, this is going to be very interesting to watch it unfold. Look at it this way - there is a whole body of management research and literature that has been used to explain Microsoft's dominance and sustained stranglehold over the PC market. Theories as network effects, barriers to entry, complementarity of goods, dominant design, economic benefits of bundling, and more. What if Google does succeed? It may not, and chances are less than even that it will, but who knows? After all, who would have predicted that a relatively commoditized item like an MP3 player could drive a billion dollars of sales at Apple through the iPod?