You may have heard of Asus's instant-on Splashtop operating system, which they are now beginning to roll out across their entire range. This is essentially a minimal Linux-based operating sytem which is built into the motherboard that's capable of getting online so you can surf the Internet, chat and read your email without having to boot into Windows.
Now Dell have announced they are offering a similar system known as Latitude ON, for their new range of Latitude notebooks. Again, it's an embedded Linux distro that can get online without needing to boot the main operating system.
Now, I spend the vast majority of my computing time online, reading emails and feeds and things like that, and I suspect a lot of other people do too. More and more, the browser is becoming the operating system. Web mail services such as Hotmail and GMail have huge advantages over more conventional email accounts, and most people now use these kinds of services in preference to the one offered by their ISP, and many ISP's offer a web interface to email accounts as well. And other services can't be too far behind - online productivity apps such as Google Docs are getting better all the time, and it's only a matter of time till they reach mainstream adoption for casual use, and services like Meebo are proving popular too. And for an awful lot of people, Facebook or MySpace is their main reason to go online. Services like Last.fm and Imeem can cover listening to music, and you've got services like the BBC's iPlayer and YouTube to handle videos. There's also plenty of casual Flash-based games if you look.
Under these circumstances, the operating system is largely irrelevant, it's just the foundation on which your browser runs, so you just want the fastest OS you can get, and the fastest browser. I can therefore see many people using these instant-on operating systems almost exclusively in preference to Windows. And why not? If it does everything they want, and is more secure, then it makes sense. You'd still have to boot into Windows for serious gaming or running something like Visual Studio Express or Dreamweaver, but it's not actually that many people who want to do this.
There's another advantage to these systems: What about for those times when Windows won't boot? You can't get online to research the problem, and you can't sort it out without being able to search, so if you don't have an alternative way to get online, you're stuck. A few months back my father's computer wasn't booting as the motherboard had been fried by a power surge, but I managed to use a copy of Knoppix to retrieve the files he needed, then once it had been fixed we reinstalled XP. Without a copy of Knoppix he'd have lost those files, but not everyone has a copy of this to hand, or knows about it. These systems would be just as capable of doing this, and they'd have the advantage that users would have already had the chance to become familiar with them.
From Microsoft's point of view, these systems probably aren't so great. Though they don't compete with Windows as such (I expect the systems will still ship with Windows), they may just break people's dependence on Microsoft Windows. People will realise you don't need to use Windows with a computer, and may be more willing to consider alternatives.
We'll just have to see how it plays out. One thing I will say: the more I see, the more I'm convinced the concept of the "Year of the Linux Desktop" and a mass migration away from Windows to Linux is flawed. The way it's actually happening is far more interesting. With embedded Linux distros like these built into motherboards, and Linux grabbing the lion's share of the netbook market while Microsoft were caught napping, but these are entirely new products. Preinstalled Linux in place of Windows does remain a niche offering, at least for the moment. These new products aren't challenging Microsoft's monopoly directly like Dell offering preinstalled Ubuntu, instead they are just making them less relevant.