Personally I think Google has a great position to enter the open-source LMS market, as it has a lot of great back end technologies already ((e.g. Google apps for Education, Google analytics, etc.). Plus, Google has been strong with its UI/UX design, which is another big plus!
However, it does takes time, efforts, and resources to build a healthy "eco system" for LMS though (e.g. documentations, the community, etc.). Just to think about how long it takes for Moodle to build such a eco system for the past 10+ years (since 2002!). I think it takes great vision for Google to enter this sector, not for the money, but for advancing LMS and to help everyone of us to be able to "learn" more efficiently... What do you think?