Jason Calacanis thinks Google will offer an Office suite in 2006:
I don’t think Google will make a PC. I think Google will:
a. launch calendar and office suite in the next six months.
b. by the end of the year they will come out with a Linux-based OS and offer it for free to PC makers. Those PC makers will love Google for giving them a free OS and Google will love extending the reach of their money maker: google Adsense.
The big win: Google can offer PC makers something they have never had: reoccurring revenue. Not only can Google give a free OS and office suite, they could offer them 10% of the Google Adsense revenue of that computer/user–FOR LIFE!
Can you imagine if Dell or Compaq could not only sell a computer for $500 with $50 in profit, but also make another $25-50 a year in Adsense revenue? The person keeps the computer for another two years and Dell makes more from the Adsense than the computer.
The Google Desktop is the greatest growth opportunity for Google right now, and Google needs to find growth if they are going to live up to their valuation. For those reasons I think this is a done deal.