In an interesting piece of soothsaying, Jason Calacanis, the “formerly” man par excellence, predicts that Google will release not only a cheap PC in 2007, but also an operating system.

“He [Eric Schmidt, Google's CEO] also told me they would never do a OS or a PC. Well, Dell is bundling Google apps with their PCs now, and I predict that in 2007 Google will release an Operating System and a super discount PC. Think, a $300-400 PC all-in-on unit that is sold at cost in order to make money off of their services.”

In a further chilling message for Microsoft, he says, “The next upgrade cycle for Office is dead in the water thanks to the Google Office suite.”

Scary.