This week’s announcement by Google of its new Google Compute Engine cloud offering is a big deal, and GigaOM’s coverage to date has been pretty spot on. However, having read the excellent coverage by Om Malik and Derrick Harris, as well as some interesting analysis on other sites (like here and here), I’m stuck with the feeling that most are missing the real reason Google will get some stalwart Amazon Web Services customers to give Compute Engine a try. Google’s quest to win over users will be all about performance.
The Google Developers Blog post announcing the service broke down three key “offers” of GCE, which I interpret as the three key differentiators from Google’s perspective of its service over the competition (not necessarily just AWS):

A demo of genome analysis on Compute Engine.
All of the coverage I’ve read to date has focused on the scale and value elements of Google’s story. And these are critically important. When it comes to scale, few can match a launch that includes roughly 100,000 servers and 770,000 cores of available capacity (though I doubt you’ll be able to grab half that for yourself in a few weeks). Google does scale for a living, and with a reported 1 million servers in operation across the company, nobody comes close — except maybe Amazon.
When it comes to value, Google fired a shot across AWS’s bow with roughly equivalent pricing, though Google argues that app-for-app, their service will be cheaper