What do I think? I think I need to not procrastinate by thinking about Google App Engine, instead of getting work done for the MySQL User's Conference next week.
That is a lost cause.
Google Apps Give people private apps under Google Apps and you will kill off a lot of department applications built around Microsoft's Access. If someone builds a "wizard" for building applications then this would go over gang buster (aka the frameworks that Borland used to build).
Lock In Yes this is the mother of all lockins for platform... or is it? I think some smart developers could build out a look a like framework. You would not have access to the Google data that you would have inside of the Google Cloud, but all in all it is not bad. I put money on the Python folks abstracting over what APIs Google provides.
Death to open source! Nope, not any more then what is already happening. Open Source is fine and dandy, what do you think Google App Engine is built on top of? Open Source means infrastructure. There have been rare examples of Open Source being the portal (Livejournal, Slashdot... a few other similar systems have been made open source). Truth is, people don't open source front ends all that often. There is little to gain from this. Infrastructure though? All the time. For the average open source developer this means something... but that something is not death. It is opportunity to supply pieces for companies to build infrastructure off of.
Salesforce.com Why wouldn't someone want to build a Salesforce.com on this system? CRM is low hanging fruit, same with CMS. What I want to know is if I could "rent" my application long term to a company to use privately via Google Apps. Do Software as a Service for Google Apps customers :)
ERP/Enterprise Apps ERP is expensive. Launching an 80/20 solution for Enterprise application with Google App Engine would be good business. Catch people at the point where they try to run their business off of Quick Books, and long before they move up into the Enterprise Apps. Both SAP and Oracle are moving at a snail's pace on these application fronts.
The big losers:
The big winner? Amazon's AWS. Competition proves the market exists :)
The immediate winner? Probably O'Reilly Publishing. They have the best books on Python :)