I think this goes beyond just beefing up Picassa. The acquisition of Picnic appears to be an excellent strategic fit with Google's over-arching goal of migrating users to a web-only system, for example by using their Google Chrome OS - soon to be launched on the first consumer products such as laptops and tablets.

To help convince users to switch to Google Chrome OS - and everything that entails - Google needs to offer as convincing a value proposition as possible. Having an excellent web-only photo-editing application ties in very closely with this because one of the main things people like to do with their computers is touch up and edit their photos. Users need to know that a good option is there for them - photo editing wise - if they are to make the switch to a system where they can't install any (photo-editing) software.

For this reason we can probably expect Google to develop Picnic further so that it functions while people are "off-line".

And we can also expect Google to acquire other strategic assets of this nature. For example, things that include online storage, music streaming / editing, gaming portals, etc. (Might be a good idea to acquire a few shares yourself in companies like this perhaps?)

I'll be making the switch - will you?

Or we might just follow the simpler lead of investing in companies started by former Google staff.

Like Picnik.