Last Week Google finally announced that they would be entering the web hosting market and what a relief it was to many of us in the industry that have been waiting for this shoe to finally drop.

Speculation has been circulating for years on whether Google would risk loosing their high cost cpc web hosting ad clients in order to become one of the largest internet companies to get into hosting. The consensus finally said that Google would get into web hosting and that they probably would come out with a product that would be free, like so many of their other services that they have rolled out recently.

As an example in 2005 Google purchased the web traffic analyzer Urchin and has since rolled out this service to their clients for free. An investment in the Urchin traffic analyzer used to run hundreds of dollars per year per site for the analytics.

Web hosting for Google may be a little different in light of recent earnings reports however. This week Google reported that growth in Search (Google’s main revenue generator) was starting to slow down. Shares of Google dropped 10%, rebounding slightly in afternoon trading, and overall Google Shares have seen disappointing results of as much as 40% off their stock value in recent months.

What these economic reports mean to me is that Google will have to offer a paid web hosting service in order to alleviate spending concerns by their investors.

Will Goggle be able to compete in the ever changing web hosting market as a tertiary business model? Those of us in web hosting industry know just how difficult it is to provide great service and great support when we are focusing our entire energies on the business of web hosting.

Within discussion boards there is strong evidence to suggest that those larger internet players like Godaddy, Dell & Yahoo who get into the web hosting market, are unable to keep up with the service standards of the smaller, true web hosting companies. *Dell essentially spun off their web hosting services years ago after a not so great showing.

There is no question that the world’s largest search engine will be able to attract new customers just as Yahoo, was able to build their web hosting business on their name alone. The real question is will Google be able to concentrate enough on web hosting to be able to roll out & sustain a great service, or will their web hosting customers become mired in mediocrity as an afterthought while Google moves on to new ventures and revenue models?

We shall see how this plays out for Google and the entire web hosting industry, but for now my money is on the smaller guys being able to hang around and continue to provide great web hosting services, while larger companies continue to chase the web hosting revenue model.