• Softepedia et al., Monday, December 14, 2009 1:23 PM

Lost in all the excitement over the prospect of a Google-branded smartphone, today, is news that likely has far greater implications for the future of the search giant.

Just months after the Los Angeles city council approved a $7.2 million deal to switch to hosted Google email and application services, Google Monday said that the City of Angels is officially "in the cloud," with 34,000 of the city's employees switching to its online services for email and collaboration. According to Google, "The cloud computing system will improve the security and reliability of city email, transitioning from servers in the City Hall basement to hosted, secure data centers." It also expects that the move will "mean less taxpayer money spent on IT -- valuable budget that can be rededicated to other city efforts over the next few years."

On the line is Google's stake in the burgeoning software as a service market, which has emerged as a key battleground against rival Microsoft, and will be a $14 billion industry by 2013, according to research firm Gartner.

Seeing as how LA is among the earliest adopters of the Google system, city council members have already expressed concern that they might be signing on before Google's cloud system is fully proven.

And, while the contract was approved pending an amendment that would require Google to compensate the city in the event that its system failed or was breached, such an occurrence could have a serious impact on the future of cloud computing.

"There are those who aren't yet sold on the cloud solution and say, not without merit, that it raises a few issues over the privacy and the security of the approach, especially when dealing with government data," writes Softpedia.

Regarding the news, TechCrunch asks: "Another sign that cloud services are maturing, or a security disaster waiting to happen?" And similarly noting that "cloud computing carries certain perils," Mashable points to the recent T-Mobile/Microsoft Sidekick fiasco, where customer data residing in the cloud was almost lost forever. Among large corporate and government-related entities, it says, "mistakes like that will be greeted with very little tolerance."

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