It’s not really competing: Google Gears is just another implementation of HTML 5′s web apps specification, though since it was released before HTML 5 was ready, it inevitably contains differences and extensions, so Google’s own offline support, for the moment, relies on it.

As things mature, this should change, and while I’d be surprised to see Gears disappear (it will probably continue to implement extensions, at least), it will, with a bit of luck, no longer be needed to make Google applications work offline; rather, any browser with HTML 5 offline support will work (Opera has supported it for a while, IE 8 does so, and Firefox 3.5 will, for example). Some features may still require Gears, and of course for a while at least Gears will still be useful for older browsers.