Many people see this move as a way for Google to compete against Amazon and Microsoft, both of which offer similar services. Urs Holzle, who oversees Google's infrastructure, debuted Compute Engine at the I/O Developers Conference recently. Holzle said that the service was aimed at organizations that needed to call on huge amounts of computing power. Holzle also demonstrated the service by showing a genetic analysis application that used 600,000 processors.
Compute Engine will go along with Google's App Engine that was released back in 2008. The older service has a lot of restrictions on the applications that can run on Google's servers and even goes as far as to limit what programming language software developers can use. In comparison, Compute Engine will be packaged as a "raw" service and give customers a lot more freedom to run applications.
Google has stated that the service is currently in a test phase that would last a couple of months before it was fully opened to the public. In addition to that, the company said that its expertise in running large data centers meant that it would be able to undercut rivals and offer nearly 50% more computer power for every dollar spent.
As I mentioned earlier, Compute Engine will have Google squaring off against both Amazon and Microsoft in this industry. Amazon's Elastic Compute Cloud (EC2) service is currently the market leader in barebones processing and has been very successful, so much so that it is estimated to be behind 1% of all net traffic. A lot of firms use EC2, as well as similar services, like Microsoft's Windows Azure, which allow them to handle spikes and peaks in traffic.
Source: BBC News - Google sets up 'raw' server service