The Register reports that Google’s at work creating a custom desktop Linux distro based on Ubuntu. In other words, they’re possibly doing what people have been speculating for a couple years now.
From the Register article:
Google has confirmed it is working on a desktop linux project called Goobuntu, but declined to supply further details, including what the project is for.
It’s possible that it’s just one of the toys Googleplex engineers play with on Fridays, when they get time off from buffing the search engine code or filtering out entries about Tiananmen Square.
I, for one, hope that they are going to make this something they release as a Google-Linux system. Ubuntu is pretty sharp as it is (regardless of some issues that I had with it on my desktop, but I know that some of my experiences are atypical), and if anyone has the resources to make it a viable general-market alternative to Windows, Google does.
For awhile I had hopes that IBM would do something like that, but apparently they aren’t interested in that (OS/2 left too many scars, maybe?).

IBM have always said that they don’t want to produce a Linux distro, desktop or server. If they had tried, I believe that they would’ve been wholeheartedly rebuffed by the Linux community as trying to ‘take over’. Instead they have worked with existing Linux companies, and done well because of it.
Equally, IBM have moved away from being a hardware/software producing company to a more services-oriented model.
Good points, all. Quite true. It was more wishful thinking on my part; you know, big company linux == linux everywhere, or something.