For Google, the opposite is true. Most of the search giant’s applications products are offsite on the server level. At the same time, more and more applications are being developed and deployed within Web browsers, which appears to have been one of the motivations behind Google’s launch of Chrome earlier this year.

“The reason for Chrome is to stimulate development in this space, to speed up Java script, to speed up off-line support and there are some reasons that are harder to understand but they are there and they have to do with the control of advertising,” said Smith.

At the same time, Tom Austin, also a Gartner Fellow, sees Google developing its own platforms for the cloud, such as Google App Engine, which allows for the building and hosting of applications on Google Web servers. In addition, Google has turned to IBM to help it develop technology, especially within the cloud, that will give those applications more of an enterprise edge.

In the march toward the cloud, Google and Microsoft are being driven by five technologies, according to Gartner. These are SAAS (software as a service), open source, Web 2.0, consumerization and “global class,” which is a new way to deliver computing services.

What might leave some industry observers frustrated is that the battle between Microsoft and Google might not leave a clear winner, according to Gartner. Google and Microsoft might wind up splitting this new space between them with each playing to their strengths. At the same time, a third company might hold the key toward developing the cloud. Smith and Austin reminded the audiences that Yahoo remains a factor in all these decisions, and Smith believes that a deal for Microsoft to buy Yahoo will still happen.

As for IT managers, Smith and Austin urged them to begin evaluating and testing Web-based applications now as these applications are still being developed.