The idea that browsers might replace client-side operating systems is being reinforced by the announcement yesterday of the Google Chrome OS. You can find more info at the Official Google Blog at:

The core idea is to add core file system, process management, and memory management features... to the browser... and let the browser be a full blown OS, running mostly browser applications (and possibly, in the future, browser extensions). Initially targeting netbooks, the OS might in the future apply to client side computers. Considering you can now run even access a virtual machine from the browser, this won't be a huge limitation... although I don't expect this approach to become mainstream for power users.

This announcement is not totally unexpected considering that rumors of a Google OS has been around for years and that the Chrome browser architecture embeds OS capabilities (like process management). Comments on the web and blog sphere have been countless, although it would have been nice to see an even unofficial reaction by Microsoft. Because, as Tim Anderson points out, it's war.