"Cloud computing is the story of our lifetime," Google CEO Eric Schmidt said. "Eventually all devices will be on the network ."

He was joined onstage by IBM CEO Sam Palmisano, who said the relationship marks a new avenue for Big Blue. "It is the first time we have taken something from the consumer arena and applied it to the enterprise ," he said.

Blurring Boundaries

Especially through its Docs and Apps online applications, Google is pioneering a consumer-facing cloud in which applications run and data is saved on Google's servers. On the business side, software as a service and hosted business applications are gaining increasing support.

While IBM and Google are currently in fairly distinct markets, Schmidt said the boundaries are rapidly blurring. "There's not that much difference between the enterprise cloud and the consumer cloud," Schmidt said. There is one big difference, though. "The cloud has higher value in business; that's the secret to our collaboration," Schmidt added.

"It's a really intriguing partnership," said Charles King, principal analyst with Pund-IT , in a telephone interview. Google, with its young cofounders, is perceived as defining the "next wave of IT attitude and solutions," King said, while IBM is the "oldest of the old wave." But the companies actually have a lot in common, "not the least of which is a dedication to innovation and building superior research groups."

Cloud and Plumbing

One other thing the companies have in common is competition with Microsoft, although IBM works closely with Redmond in certain areas. "The key issue here is exactly what place does the operating system have in the future of desktop computing," King said. "As the Web becomes more ubiquitous and high-speed Internet connections become widespread, there are new opportunities in Web-based applications and software as a service."

As much as Google has popularized the notion of cloud computing, it's big-iron companies like IBM that have created the enabling infrastructure . "The whole emerging class of Web 2.0 and cloud-computing applications and services requires a very, very robust infrastructure to support them," King said. Without these strong underpinnings, cloud computing is like a fancy apartment building without plumbing or electricity, he added.

Thus, IBM and Google can make gains by "combining their forces to extend hardware and software infrastructure," King said. "Google needs to figure out a way to extend their reach into business. They have the ambition and the product assets, but they haven't figured out how to reach into business."

While large companies frequently announce cooperative initiatives, only to have them wither on the vine, this agreement will likely bear fruit, King said. "The fact they're still talking about this a year after the cloud-computing project codeveloped makes me optimistic. They're not the two companies you would think would work together, but they're both engineering-centered organizations," he said.