Looking at this from an enterprise perspective, this is indeed a return to the 'thin client.' Simply a newer and slightly different destination for the client, and the 'green screen' text-only apps are replaced by something more modern. Think about the ease of managing this device. It fails, swap it out. Nothing lost. In the office, management becomes a no-brainer. and, the cloud CAN be a company intranet. Sun tried this with their Sunray, running everything in Firefox, but it was slow, and the build quality was awful (I know, I was a beta tester). Fail. The concept is an IT Manager's dream if/when it works. Working at a company with 75K users, this would be very attractive to the decision-makers.
That being said, as an end-user device for 'home and/or mobile' computing, until every square meter of the planet is connected, it will remain a niche product. Offering a token amount of data transfer is a good start, but until this becomes realistic (unlimited capacity at a reasonable price), North America simply has too many dead areas for this to be viable (without some form of supported persistent local storage).
I like the $99 idea! But, what is Google's real direction here? Selling to companies first is my guess.
"Not everything that can be counted counts, and not everything that counts can be counted." Albert Einstein