As predicted from TechCrunch yesterday, Google has announced the pricing model for their App Engine pricing, plus a few other features which are coming down the pipe a little later in the year.

With the following pricing ( together with AWS ), this sets the base rate for commodity computing.

500MB storage and enough CPU and bandwidth for about 5 million page views per month
$0.10 - $0.12 per CPU core-hour
$0.15 - $0.18 per GB-month of storage
$0.11 - $0.13 per GB outgoing bandwidth
$0.09 - $0.11 per GB incoming bandwidth

Clearly there are only going to be a few players in the market that can build up enough computing power to support these market dynamics. The real value will come from the value added partners that build on top of these platforms.

Secondly this is targeted at the low end, where an SLA is not really that much of a requirement. I think that the "Race to the Cloud" really gets started when those SLA's get more focused on supporting SMB and Enterprise customers.