Amazon has been dominating the "cloud" space for many years, and I've never understood why Google didn't want to even compete with them, even though they are one of the biggest hardware makers in the world, when it comes to servers, because they make their own, and they have over 1 million of them. But it seems that Google is finally ready to make that step:
"Google is hard at work on a cloud computing offering that will compete directly with the popular Amazon EC2 cloud, according to a source familiar with Google's plans. Not to be outdone, other sources have confirmed Microsoft is also building an Infrastructure as a Service platform, and that the Redmond cloud will be ready – or at least announced – before Google's. According to my sources, Google should roll out its service for renting virtual server instances by the end of the year, while Microsoft is slating its big announcement for a June 7 event in San Francisco.Advertisement
Although Google declined to comment on whether the offering is indeed on the way, an IaaS cloud would make a lot of sense for the company. It already has a popular platform-as-a-service offering in App Engine that is essentially a cloud-based application runtime, but renting virtual servers in an IaaS model is still where the money is in cloud-based computing. Google also has an API-accessible storage offering – the aptly named Google Cloud Storage – that would make for a nice complement to an IaaS cloud, like Amazon's ridiculously popular S3 storage service is for EC2."
Can Google really unseat Amazon from their position? That's unlikely unless they somehow change the game. You can never really change and entrenched competitor just by offering a slightly better solution or a cheaper one (unless it's much cheaper). But Google is more likely to go after Microsoft than Amazon, in the enterprise market, because there's still a lot of room for growth there, and a lot of money to be made.
Lately, Google has been making some strong inroads in the enterprise space with their Google Apps service, and I figure they will want to offer a more complete solution to enterprises, because in enterprise they would rather go with someone who does everything for them, even if it's a mediocre service overall, than to have to go with multiple service supplier, and create incompatibilities. Google is rumored to launch this service at I/O next week, so we'll see what it's all about then.