Google Steps Closer to the Cloud - Analyst Blog

Mountain View, California-based Google Inc. (GOOG), which is slated to introduce its cloud-based Chrome operating system later this year, took another step towards achieving this goal. The company has announced an online marketplace where software developers will be able to offer their products.

The software to be sold at the store will be closely tied to Google’s own cloud computing services, essentially enhancing Google’s current lineup and encouraging consumers to adopt the Google system. 

Developers will be able to offer their products at a $100 fee, they will be able to fix their own prices and collect the proceeds after leaving Google a margin of 20% on sales.

Google stated that around 50 companies had already agreed to sell via the app store and we expect the number to increase going forward.

However, the cloud computing system does have its own hurdles, as businesses are usually concerned about security and access. Although Google has been spending billions to improve the reliability of its services, only time will tell how successful it will be.

Archrival Microsoft Corp (MSFT) dominates the operating systems market and has declared that it is spending heavily on the development of cloud-based services. The company has also followed Google in offering a free version of its extremely popular Office Application.

But this latest announcement seems to indicate that Microsoft will be behind Google when it comes to cloud-based services. Microsoft’s advantage lies in its operating system and the new Windows 7 offering, which large enterprises are likely to prefer.

Regarding access, Google has had its share of outages, so the situation is wide open. Moreover, Internet speed will also be of prime importance, as the Chrome-centric computers will be completely non-functional without effective connectivity. We think the early adopters are likely to be companies in the small and medium business (SMB) segment, given their low operating budgets and the recent blow from the recession.

The tech sector has been buoyant since the market opened this morning and Google shares are already up around 1.50%.

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