Fortune Magazine recently published an article explaining Google's plan to compete with Amazon and others in the cloud. They say they've got their work cut out for them since last year Gartner estimates showed that Amazon Web Services is running with 10 times the capacity of it's next 14 cloud competitors combined.
They showcase how Google is building an infrastructure comparable to Akamai and is partnering with the Content Delivery Network leader to enhance both company's capabilities. They also have put former VMWare CEO in charge of their cloud unit which should help them be more competitive.
But Google has struggled to cloud services to business users mainly because they haven't had the history of selling through a channel to these kinds of accounts in the same way that Microsoft or IBM has had and without those relationships, it's an uphill battle to win the their trust. They've had to play the price game to attract new customers and that's never a winning strategy when dealing with competitors with a larger footprint or better relationship with clients.
Obviously, Google has a tremendous amount of technical know how and a very lucrative cash flow from their search and advertising businesses to fund a tremendous amount of R&D and make strategic investments to help them catch up with Amazon and Microsoft. so this battle is just beginning.