Do you mean the idea of creating their own OS? Or the timing of the announcement itself?

Obviously they've been working on this for at least some time now if they are releasing the code in a few months.

Both. Microsoft has always stated they were interested in getting into the search business, so there is no surprise there. The fact that they've released something that is actually good may have spurred Google to make their announcement before having something to actually demonstrate.

I would imagine (as most have) that they are releasing some sort of Google-centric Linux distribution. This would make sense as it doesn't take long to roll your own if you know what you are doing (and I'm pretty sure Google knows how to do this).

From google's blog post I'm under the impression that while based on a linux kernel it will have very little actual code from linux. It sounds like they are writing their own version of X with a minimalistic window manager.

I very much like the look of the chrome browser so I'm looking forward to checking this out. Specially since I'm one of those that doesn't do much on his home machine besides web based stuff.

Microsoft has been in the search business for many years now.

According to Robert Scoble, this may be a preemtive strike by Google since Microsoft has something to announce on Monday.

http://ff.im/4WvjM

I thought it was common knowledge that microsoft is announcing the RTM sign-off on Monday 7-13-2009. This has been known for a while.

WZor.net has more information but they should be choosing which candidate build is the RTM shortly, and then an officially announcement will come Monday.

I suspect this is the right answer.

Given we've also seen a slight reshuffle of their web app (dropping the beta logo for example) in the same week.

I don't think so. What they've said about Google OS is completely consistent with the rest of their stated philosophies. In any case, there's already way too much speculation going on about it.

No, it is apples to oranges. If they feel like reacting to Bing, it will be a more direct approach, such as adding realtime results to Google searches.