Why Google Needs the GDrive to Fight Microsoft

[qi:003] The Internet is abuzz these days with speculation over the launch of a new online storage offering from Google (s goog) said to be dubbed GDrive. The service would apparently be bundled with Google Pack, the company’s software download offering that includes products such as Picasa and Google Earth. With no official word, many questions remain unanswered about the service. But I have a theory as to why Google is introducing what is essentially a commodity service.

Online storage isn’t quite the pot of gold folks assume it to be. Even with millions of page views generated by free online storage, the resulting advertising revenues are never going to be meaningful. They can charge for these services, but that means a long gestation period. There are some that manage to make a decent living offering back-up services, but such revenues would represent little more than a drop in Google’s overall business bucket.

Information leaked on the web outlines Google’s GDrive ambitions: “GDrive provides reliable storage for all of your files, including photos, music and documents. GDrive allows you to access your files from anywhere, anytime, and from any device – be it from your desktop, web browser or cellular phone.” In other words, an awful lot like Microsoft’s (s msft) Skydrive and Live Mesh offerings. Google, however, always introduces products to consumers before taking them to corporate users. Google Apps is a perfect example: GMail was available for consumers before it became part of Google Apps and was sold to enterprises. GDrive will involve a similar strategy as well.

I believe Google is looking to build something unique, a service that it would position as a direct competitor to not only Microsoft’s SkyDrive and Live Mesh services, but to the software giant’s SharePoint services. My guess would be that they would marry GDrive storage with Google Apps and other applications, such as Google Talk. In doing so they’d create a virtual “computing environment” in the cloud.

Think of it this way: On your computer you have a processor, storage, memory and a screen, and operating systems and applications running on top of it. In the always-connected world, the notion of computing has gone through a change. What was once put on a disk is now put into an online storage locker, while the processor and memory is locked away somewhere in Google’s data centers. The browser is the operating system. So anywhere there is a screen and a connection, you can access the computer. (Of course you could do this back in the days when mainframes ruled the planet, too.) 

In a post last year, I argued that one way for storage startups to stand out would be by using the online storage drive as “an underpinning to share documents, files and folders with people in your network (whether consumer or corporate).” That’s precisely what Microsoft is doing with its SharePoint service, a billion-dollar business that grows stronger by the day. “What’s working well for Microsoft is that they are treating storage for what it is — a cheap throwaway service — and layering it with more valuable ones,” I wrote.

And Microsoft wouldn’t be the only company Google would be looking to take on with this offering; Cisco Systems (s CSCO) and EMC (s EMC) would be in its sight line as well. In a post last August, I pointed out that, “Cisco would develop a suite of applications that pivot around WebEx, which they could do by offering to work with all comers, big and small. Acting as a neutral player that delivers best-of-breed web services would give Cisco that best shot at effectively competing with Google-only and Microsoft-only solutions.”

From a strategic standpoint, I marvel at Google’s game plan. From a personal standpoint, however, I don’t like it a bit. My biggest problem with GDrive is that it would come from Google.

As my friend Mark Evans points out, “Before you know it, Google has become a daily and integral part of your digital portfolio. Not that this a bad thing given Google’s products are really good but it should make you think about how dependent you can become on Google for pretty much everything. The downside is you can lose access to a lot of essential information if Google, for whatever reason, locks you out.”

My fundamental belief is that as companies get too big and too powerful, they start doing anti-consumer things because they have a much larger revenue stream to protect. And while Google might come across as cute and cuddly today, they are, in reality, a monopoly. Giving such an entity unfettered access to my desktop and my data makes me uneasy.

Paint me cynical –- though I like to think of myself as realistic –- but I don’t think Google’s backing of President Obama and his campaign was done with purely altruistic intentions. Given how close the company’s management is with the government officials, I worry that Google will one day go too far — and get away with it.