In this corner, with a $214 billion market cap, is Google and “The Cloud” (and partners like IBM). In the other, weighing in at $327 billion, is Microsoft and the PC desktop. This is the theme of a Sunday New York Times piece about the high-stakes future of computing. The article explains that “cloud computing” — essentially software hosted on the server instead of on the desktop — is a natural outgrowth of Google’s model and network of data centers around the globe. Microsoft, whose business model depends on selling software installed locally on PCs, takes exception to Google’s vision, as one would expect.

While Microsoft sees the Internet as an integral part of the future of computing, it doesn’t see it as the alpha and omega. Of course, neither does Google, which has developed Gears to bring online applications onto the desktop and to address environments where there’s limited Internet connectivity.

The Times’ article goes into a range of areas, including software release cycles and time to market, as well as the growing popularity of Google Docs.

A related and lengthy piece in BusinessWeek talks about the genesis of the Google-IBM partnership around cloud computing and the range of efforts by Google and a few others to move computing functions onto the server and off the desktop. This piece provides a different angle on Google’s move into cloud computing and presents it as an “evolutionary step” for software development.

However, as the NY Times points out, “The growing confrontation between Google and Microsoft promises to be an epic business battle. It is likely to shape the prosperity and progress of both companies, and also inform how consumers and corporations work, shop, communicate, and go about their digital lives.” But it’s not likely to be the case where one company wins and the other loses in such a zero-sum fashion. However, Microsoft takes the Google threat to its core business seriously and is also trying to build search and its online ad business as both offensive and defensive measures.

Accordingly, each company is moving quickly into the other’s business, and that will likely continue and intensify.

Related Topics: Google: Business Issues | Google: General | Microsoft: Business Issues | Microsoft: General

About The Author: Greg Sterling is a Contributing Editor at Search Engine Land. He writes a personal blog Screenwerk, about SoLoMo issues and connecting the dots between online and offline. He also posts at Internet2Go, which is focused on the mobile Internet. Follow him @gsterling. See more articles by Greg Sterling