Ever since it was announced, I have been fascinated by the potential appeal of the $100 laptop developed by MIT, with the backing of Google and AMD among others. It’s now in production. I’ve written about it a bunch in the past and won’t reproduce all those comments (or links) here. I said originally this is the realization or "second coming" of Oracle’s Larry Ellison’s "network PC" idea, which was a response largely to Microsoft’s market position and power. Google cofounder Larry Page in his CES Keynote mentioned the low-cost machine as a way to overcome the first-world, third-world digital divide.

Bill Gates doesn’t like the idea for several obvious reasons (neither does AMD rival Intel). But more importantly he doesn’t think consumers will like it. In a somewhat related vein, Microsoft has touted Origami as a response to the size/power/functionality challenges of mobile computing (the price range is $799 to $999).

I do think consumers will be interested in the $100 computer (there’s already considerable evidence). The current "hand-crank" design may have less appeal to certain consumer segments than it could, but design elements can be changed over time. Alternatively it may indeed turn out to be a product for emerging markets (I don’t think exclusively so). That’s still millions upon millions of potential customers.

The thing that struck me tonight about all this was that a kind of global vision for Google comes into focus. People have been speculating for the past couple of years about a GoogleOS or a GooglePC. There’s no GoogleOS, per se — although there is GooglePack and the deal with Sun regarding OpenOffice. And now there’s the Google acquisition of Writely. And then there’s GDrive.

Let’s put aside the major, major privacy issues that may prevent GDrive from really hatching into a full-grown butterfly. Having made that very important qualification, let’s step back and look at the really big picture here:

1. Low-cost computers that don’t have big hard drives (say, the $100 laptop or a similar device)
2. Ubiquitous high-speed access (see GoogleNet or FON)
3. Web-based consumer software apps (e.g., GMail or Writely)
4. Virtually unlimited personal online storage (GDrive)

Now you see where I’m going.

This is not to say it’s the same place Google is going. But from one point of view it’s certainly a compelling roadmap. Google thus would be the network and host most of the necessary software. Google and its allies would replace Microsoft as the primary computing platform — swapping the Internet for client-side applications. Microsoft sees the storm clouds on the horizon and that’s why I among others believe it’s pushing Live (in addition to the market segmentation value there).

The supreme irony of all this is that while Google genuinely wants to offer value to consumer-users it doesn’t as clearly recognize how the realization of its vast ambitions would effectively turn the company into Microsoft (maybe it does), in terms of market domination and corresponding suspicion (which already exists). Microsoft, for its part, is now cast as the underdog and "good guy" when it comes to the Internet. That is an amazing turn of events — and not lost on the people in Redmond.