[kidakaka]

Hey Biggie,
HP has come out with a similar concept like this. Its called a Thin Client. Wherein, each dumb terminal is preloaded with embedded Windows ... and all the softwares are residing on a central server. This results in -

1. lesser power consumption (green technology)
2. more control for admins (yaayyy!!)
3. cost effective and scalable solution

Or are you referring to a truly web based OS like desktoptwo.com? In which case you will still need a barebones OS and a browser.

But I guess, its more like an extension of the Software as a Service (SaaS) model, wherein users do not have to pay huge lumpsum amounts for a particular software package, but instead do a pay-per-usage payments.