If successful, Google could help refashion computing, making people less reliant on storing information on the Microsoft-powered PC on their desk and more dependent on free Web-based e-mail and search functions that can be accessed anywhere from any device regardless of the operating system.

Under such circumstances, the risk for Microsoft is that the computer desktop as we know it could cease to exist, said David Garrity, an analyst with Caris & Co. The question, Garrity said, is whether computer buyers may one day decide that they no longer even need a Microsoft operating system.

The two companies are already battling it out on fronts including Web search, free e-mail and better ways for searching individual computers. Analysts say that's evidence Microsoft should — and likely is — taking Google much more seriously.

FullStory: Yahoo! News.