As much as Microsoft hates this piece of news, its true. Google indeed plans to extend its Chrome browser to a full-fledge operating system. The Google OS, officially dubbed as Chrome OS, would be built on Linux kernel and will provide users with an operating system that just does the necessary work quickly and removes nuisance of viruses, malware and security updates.

The Chrome OS is targeted for advanced internet users who want instant access to emails without having to wait for OS to boot up and web browser to start, want their computers to always run as fast as when they first bought them, want their data to be accessible wherever they are without having to worry about hard drive backups, and don't want to spend hours configuring computers to work with every new piece of hardware, or have to worry about constant software updates.

As its suppose to be an open source (read FREE) OS, how would Google benefit from it?
Google answers, "any time our users have a better computing experience, Google benefits as well by having happier users who are more likely to spend time on the Internet."

[Google Blog]