Online Storage 2.0 - We'll Use 'em All
MIchael Arrington just wrote that Microsoft's Live Drive online storage service might launch before Google's. I can't say that I think it matters who launches first, there's room for everyone in online storage. As long as they provide an API. What I think will happen is that hosted applications such as Salesforce, Writely (well maybe not Writely since they're owned by Google now, but you get the point) will allow people to choose where they want to store their data. Take your pick of Amazon S3, GDrive, Live Drive, or Omnidrive. It'll become part of the signup process for applications.
It makes complete sense for the consumer and the application. The app doesn't need to worry about storage capacity, it just sends data to the drive. The experience doesn't change for the user, his data just gets sent to his repository of choice, where he can then integrate it with other applications. In fact, I wouldn't be surprised if apps let users set up multiple repositories and then let them choose which one they want individual files to be saved to.
What Microsoft and Google will have going for them is a huge user base and slick front ends. I assume Microsoft will also build Live Drive integration into Vista given the Tech Crunch post. Consumers probably won't pay for it since Microsoft and Google will be free, but what Amazon S3 will have going for it is the enterprise market. Probably not for sensitive data, but for general file storage it's a no-brainer. You pay (not a lot) for 100% uptime secure storage that you "own", and you can easily integrate it into your own applications.