That obviously means you’ll see more and more “hosted,” “managed” or “live” apps. Software will become a service. And since communications will be embedded into software, communications will simply blend into the use case for software.

That doesn’t necessarily or inevitably mean “settlement free” or “cost free” software or communications. It does mean “communications” will be an expected feature of office and enterprise software, instant messaging, texting, email, document and other experiences.

On a broader scale, the era of cloud computing also means more value is going to move into the applications arena. Everyone will assume the existence of broadband access, to every key kind of device. And then value will be created by the applications accessible over that pipe.

And that is what makes Google an important company. It is a software company built on the growing existence of cloud computing architectures, and it builds its business around the value apps it can create in that environment. Nor does it limit its revenue model to “recurring services fees” or “buy this product” models. Like a media company, it can use a blended revenue model partly based on advertising and partly based on user fees.

At a more prosaic level, Google so far has managed to approach the innovation process in ways that allow it to move faster, and faster is the primary requirement these days. It operates with a “short attention span.” It understands the immediacy of information and the need to act on information fast.

It also understands, and has helped create, an environment where people expect an immediate answer. That leads to multi-tasking, which might be sub-optimal in some ways, but clearly is a trend. Google also works hard at surfacing new mechanisms for uncovering and discovering insights, a must in an “overloaded” information environment.

Still, it arguably is Google’s positioning as a large software company built on cloud computing that makes it so powerful. Google might be wrong, but it really believes that, ultimately, 90 percent of all computing tasks will be done in the cloud. So, one way of looking at matters is that Google wants to change the way the software business works; the way computing chores are handled; the way users interact with software and where value lies in the ecosystem.

Web software, in other words, operates with different principles and different economics. Web apps can make different assumptions about computing and horsepower, for example. Essentially, Web software can ask the question: “what would you do if hardware, storage or processing power were free?” It’s a rhetorical question, but leads Web software in different directions that conventional software.

Also, instead of waiting for somebody else to give it a computing architecture built on massive, inexpensive computing, storage and communications, Google simply has built its own infrastructure for supporting Web software. It is the “cloud.”

In the business environment built around the cloud, “velocity matters.” Conventional software is typically built, tested and shipped in two- or three-year product cycles. Inside Google, Mr. Schmidt says, there are no two-year plans. Its product road maps look ahead only four or five months at most.

With a vast majority of its products Web-based, it doesn’t wait to ship discs or load programs onto personal computers. Google makes services and apps available, and people can use them, immediately. So it is that Google routinely upgrades and introduces new software.
Cloud computing also might propagate differently than most enterprise software does. Enterprises move slowly because they have to. But consumers and smaller businesses suffer from no such restrictions. And even some enterprises, such as colleges and universities, have fewer architectural constraints. It is conceivable that cloud computing surfaces first as a significant phenomenon in the consumer and small business segments.

That doesn’t mean enterprises are exempt; just that they might be slower to adopt.

About 2,000 companies are signing up for Google Apps every working day, Google says. Most are trying the free version. That’s fine, Schimdt says, because those users also generate more search-related advertising revenue for Google. Companies with more than 50 users are beginning to sign up for the Google Apps Premier Edition at a charge of $50 a year per user, which includes customer support. For mid-sized and some enterprises, inexpensive, low-stress e-mail might be the initial lure of Google Apps.

And that’s what makes Google such an important company. It might be the first sizable player in the broader applications markets poised to take advantage of cloud computing across a range of user segments: consumer, small business and enterprise. Value is in the apps and apps are driven by software. Software is vastly easier to create and distribute in a cloud computing environment. And right now, Google just does that: better than anybody else.