That's not quite what I read into that post: "Google's goal is to commodify (reduce the marginal profit to zero) of everything that they don't make money on."
The reason for this is simple: every Google consumer must first have a PC and an Internet connection (ignoring Android for now). So, to have as many customers as possible, Google must first make sure as many people as possible have a PC and an Internet connection. The best way to achieve that is to make these items both as cheap and as attractive as possible.
Thus, it isn't about weakening competitors. Microsoft does NOT want to sell as many copies of Windows as possible, it wants to earn as much profit as possible. At some price point, reducing the price by 1% might only earn MS 0.5% more customers, so to them, going below this price is not a good move. But, every customer that Microsoft 'ignores' in this way is almost always also lost to Google (and every other software producer).
So, in order to maximize its own potential consumer base (= potential profits), Google must put pressure on Microsoft to allow even more people into the software marketplace. How? By changing the perceived value of OSes and office packages, also known as Total Cost of Ownership (TCO). If I can get an OS and an office suite for free, why would I buy MS stuff? Well, if the free office package can't read the dominant file format, that's a huge increase to my TCO. If the free package also has a bunch of useful elements not present in the other one, then that might balance things out.
Google's aim is to drive down the TCO of a typical computer setup, including OS and office tools and then make their profit on additional software.
Microsoft's aim is to drive down the TCO of a typical computer WITHOUT OS and office tools and then make their profit on those items.
So yes, Google is directly aiming at Microsoft, but that in and of itself is not their strategy, it's just a simple fact that they cannot both win in the current situation.