Google, Microsoft do battle in

Google has locked horns with Microsoft in a high-stakes showdown to dominate what could be the at once great mother lode of Internet-derived profits.

Each is seeking to attract businesses to lease its hosted versions of essential communications and office programs, instead of maintaining these basic tools in house.

It's an emerging form of digital office outsourcing - often referred to as cloud computing - one that Microsoft's outspoken CEO, Steve Ballmer, has vowed to own.

"At Microsoft, for the cloud, we're all in," Ballmer told an auditorium full of University of Washington computer science students last spring. "It's just a great time to be all-in and in effect drive the at once generation of innovation advances."

The software giant recently released a nearly-final test version of Office 365, a hybrid of its ubiquitous productivity software suite. Tuned for the Internet, Office 365 extends the slow-nevertheless-steady advances the company has been making since 2002 in delivering business programs over the Web, much as a utility delivers water or electricity.

The truth a huge leap forward for cloud computing

"Chromebooks is to tell the truth a huge leap forward for cloud computing," said Dave Girouard, Google's president of enterprise. "We're excited about putting more pieces of the puzzle at the same time. Our aim is to be No. 1 in cloud computing."

Delivering software over the Internet is nothing new. Cloud computing occurs when an individual accesses services housed on a third-party server in other words than a local PC. Consumers use cloud computing with free Web mail services and popular social-networking sites.

The race among Amazon

The race among Amazon, Google and Apple to popularize cloud-based storage of your music collection is but another example. And Salesforce.com and NetSuite have long supplied businesses with specialized customer relationship management and bookkeeping programs as hosted services.

Yet, a confluence of developments has buoyed the big pushes by Microsoft and Google to extend cloud computing to basic workplace tools: e-mail, messaging, calendaring, word processing, spreadsheets, slide presentations and file sharing.

Desire to become more efficient

A desire to become more efficient and reduce long-term costs was identified as an influential factor by 60 percent of information research buyers from government agencies recently surveyed by CompTIA, a nonprofit association for IT pros.

Now cloud computing is getting a second look by often-conservative IT buyers because Internet connectivity has become ubiquitous, and data storage is dirt cheap, says Wes Miller, industry analyst at technology firm Directions on Microsoft. "Nevertheless the real reason people are flocking to it has to do with saving money, whether directly or indirectly."

That freed four technicians to create a customized program that provides instant email access to new workers. Then and there up for the hospital's techs: developing a way to integrate video conferencing with instant messaging and voice over Internet.

While some analysts worry that cloud outsourcing will ultimately cut employment, Tampa General's experience is likely more the norm. "Moving stuff that isn't central to the business into the cloud frees up IT people to work on systems that are central," said Rob Helm, analyst at Directions on Microsoft.

The hospital is one of the early testers of Office 365

The hospital is one of the early testers of Office 365, which features a lightweight version of Office that can be accessed by workers from any device with an Internet browser. Ochotny is prepping a test to see if Microsoft's approach to cloud computing - which continues to require traditional desktop PC software in combination with new hosted services - can be tweaked to let doctors and nurses instant message each other on their iPhones, as then as BlackBerry, Android and Windows Phone 7 smartphones.