The NBR is reporting this morning that NZ Post has signed a major deal with Google to move away from Microsoft Exchange and Outlook for email and onto Google Apps. The cost saving measure should trim $2m off infrastructure costs over 3 years and that “now the first domino has fallen, others could follow”.

It was only 12 days ago that Google announced plans for their own OS for netbooks. Microsoft responded 5 days later with news that they would offer a free, web-based version of Office 2010 and then followed that up with pricing for their cloud computing, ‘Software as a Service’ offering Windows Azure.

The two companies appear to be fighting it out to gain centre stage for the upcoming computing revolution, the day when we’ll all be working from home with a thin, netbook sized client that runs applications from a server farm somewhere offshore and all our personal data is held in the cloud. Not only will this solve Auckland’s transport problems but it’ll probably ensure many companies can worry less about the impact on productivity during swine flu epidemics.

Has Microsoft seen the writing on the wall for traditional personal computing? Do companies no longer need to run in-house IT departments patching and backing up mail servers? Can we outsource all our data storage and application requirements safe in the hope that security will be taken care of for us and our confidential information kept secret?

If you followed the Twitter leak last week when company documents stored on Google Apps were made public you’d probably think twice about keeping anything out in the cloud. But this seems to be the path many companies are considering both to trim costs and empower their workers to operate and collaborate remotely.

With the BBC reporting that “The market for mobile applications, or apps, will become ‘as big as the internet” then the days of a proper Dicky Tracey style wristwatch computer phone can’t be far off. And if NASA did manage to put a man on the moon all those years ago, surely the brightest tech minds will be able to predict and adapt to the challenges of cloud computing. Just don’t think about what Google, the new Microsoft, is going to be doing with all your data.