Google and IBM are testing a cloud computing infrastructure that could become an important avenue for them to deliver software and services to consumer and business users.

Google's Eric Schmidt and IBM's Sam Palmisano addressed a gathering of IBM business partners in Los Angeles last week and revealed the two companies have developed a cloud computing environment that runs on Linux and includes Xen virtualization and an Apache implementation of the Google File System called Hadoop.

Last year, the two companies teamed up on a parallel-computing initiative.

The IBM/Google cloud environment is being tested at the Massachusetts Institute of Technology, Stanford University and Carnegie Mellon University.

The pair isn't the first to test the cloud concept.

Amazon is offering a cloud environment called EC2, which has companies or developers paying only for the capacity they need to run their applications or services that they in turn are offering to users or business partners.

While the two CEOs did not announce any future plans, they said the IBM/Google cloud would eventually be used to support an array of services and applications tailored for consumers and businesses.

Google already has a number of online services for consumers including calendars, photos and Google Docs word processing tools. Google also is positioning Google Docs as a suite of applications for corporate users, including offline capabilities.

IBM recently released IBM Symphony, a set of similar office productivity tools that users can download and run locally and can be tied into other services. It also has a set of social-networking tools that could be offered as a service.

The IBM/Google cloud initiative would compete with Microsoft's software-plus-services strategy and the recently announced Live Mesh, a storage and synchronization framework. Microsoft is attempting to tie the cloud to desktop and devices, and its on-premise business and server applications. In April, the company announced it had begun a beta to test a combination of Office and online services under the codename Albany.

Schmidt was quoted by the Dow Jones news service as saying Google's relationship with IBM is a "key plank" in its strategy "otherwise we can't reach the customers."