Xerox PARC (the Palo Alto Research Center) was an amazing place in its prime. It's a shadow of its former self, but other groups have fared even worse: HP 's research group has seen large cuts (including Alan Kay's group), and even Lucent has closed the department that created Unix (lest I be pummelled, note that IBM Research is doing quite well, thank you very much). There's no question that Google's labs are in a very vibrant period, having recently snagged Vinton Cerf and Daniel Russell. The most telling sign is that Google's moves are really annoying the folks in Redmond (for more see the recent article in Informationweek).
I love competition; it makes us all less complacent and ultimately serves the industry and its customers as a whole.