Google launched the Google App Engine at Campfire One last night, a service that allows developers to run web applications on Google's infrastructure. TechCrunch's Mike Arrington has a great overview of Google App Engine, which competes with Amazon's S3, EC2 and SimpleDB services. Unlike Amazon's services, the Google App Engine is an all in one solution that includes Python servers, database access through Google's BigTable, and Google File System data storage.

The first 10,000 developers to sign up for the service will be allowed to deploy applications, which will be served initially at no charge. Developers can store up to 500 MB of data and have enough processing power and bandwidth to serve an application that equates to about 5 M pageviews / month.

This is another step forward to reducing the time to market for Internet start ups. There's now another option available to developers who want to build out an online application. They no longer need to worry about hosting the application, or buying servers to host it.

Essentially what this does is continue to make application hosting and storage a commodity whose price is approaching zero, removing that as a competitive differentiator. In my mind, this increases the need for a great user experience - and this user experience will likely be the competitive difference for Internet applications. That's where the value will come from. The performance of an application will now be taken for granted - it can run on hosted infrastructure that (in theory) should always be available. The difference for these applications will have to come from something else - and that something else is likely to be the user experience.

How easy is it to use your application? How engaging is the experience for your users? If you haven't thought about that, you should. Because that's where the money is going to come from moving forward.

More information at the Google App Engine blog, ReadWriteWeb and O'Reilly Radar.