Google made a splash yesterday with the announcement of Google Chrome OS. The lightweight Linux based operating system is supposed to arrive in 2010, first on Netbooks. A Google OS is surely something Microsoft doesn't like, especially when Google is giving it away for free.
Apparently Microsoft is making a big announcement on Monday, which is supposed to be related to the Google OS announcement. On Monday the Microsoft World Wide Partner Conference starts in New Orleans.
Robert Scoble confirms an announcement on his Friendfind account. He is not saying what, as he is embargoed.
NeoWin pulled together several possibilities on what Microsoft is going to announce on Monday including the new Gazelle Browser and Office Web. Gazelle would be hot as it is a browser with self contained OS for web apps.
Microsoft published some research (page unreachable right now) about Gazelle, but it is unclear how close it is to release.

Are we on the verge of something new? Are we about to completely move into the cloud? Is Windows 7 a short lived in between step? Exciting times.