Race is on for a Web 2.0 suite alternative

Google's intended purchase of JotSpot, not to mention Oracle's recent unveiling of Web 2.0 tools, points to a consolidation drive now under way to provide one-stop shopping for Web 2.0 functions.
I've long said on the Gillmor Gang that a lot of the Web 2.0 sites and companies are really features, not applications. Social publishing and collaborative content creation and aggregation are fundamental aspects of work itself -- they are not destinations or portals. Same, by the way, can be said of ranking content, ala Digg. This should be a service, not a destination.
So once we acknowledge that a bundling of Web 2.0 functions makes sense, then we need to ask: Should they be pure services, something an enterprise sets up for internal use, or simply allowed to happen ad hoc by users, with no central management or coordination? How best to package and deliver these services?

We know from the history of IT that while many functions begin ad hoc, they tend to flourish in the mainstream best as a centrally controlled, in-house capability. Microsoft Office is the best example.

That was, of course, until Google. Google is breaking the old mold on services and on-premises deployment and centrally controlled IT suites. Beginning with small and SOHO businesses, Google is providing all the ingredients for both Web 1.0 and Web 2.0 (as well as Collaboration 1.0 and Collaboration 2.0 ... as well as Marketing 1.0 and Marketing 2.0 ... as well as Advertising 1.0 and Advertising 2.0 [you get the point]), as a service.

They may be providing all these ingredients centrally, and with federated ID management and single-sign-on, but they prefer to make it appear as if it's still all ad hoc, and that it is creative intentions alone that drive their use. Fine.

But make no mistake, Google is making a suite of various essential ingredients to collaborative business. Period. JotSpot is just the most recent example of an ingredient.
The question is: What will be the alternatives for Web 2.0 business functions as either a service or a product suite? Microsoft? Or will there be an open source, non-Google set of alternatives? As much as I like Google and their business offerings, I'd like to see alternatives thrive in the marketplace. Look how well wikipedia does sans Google. Why not an open source Web 2.0 suite that remains, heavens ... commercial open source.
So what do the Web 2.0 players who are not lucky enough to be bought by Google do? They should band together -- recognize they are cogs and not wheels. They should find a way to federate and to share their marketing, distribution, and perhaps infrastructure needs and solutions. And they could probably do well by an adveretising business model that then leads to higher-end deployments in traditional form inside enterprises. I other words an advertising, commercial open source business model.
There will be plenty of room for Web 2.0 features. But the winners will win due to the right packaging, trust, and convenience. Google does not yet own those attributes for everything.