I did a little experiment a couple of weeks ago. I registered a domain name at 1&1 (because it cost $5.99, versus $9.20 at GoDaddy), and used it to sign up for Google Apps for Your Domain. I don't think the process would have been intuitive to the average man on the street. When I followed Google's CNAME and MX record instructions, I got this message from 1&1: "Full functionality cannot be guaranteed if you choose DNS settings... Click on Reset to return to the 1&1 default settings.".
I wondered why Google didn't offer domain registration itself. As Netcraft pointed out, Google became ICANN accredited almost 2 years ago.
As it turns out, Google was working on it. I just found out via CNet that Google has partnered with GoDaddy and eNom to offer $10 domains (price includes private registration). The service went live yesterday, along with other features such as multi-domain support and customizable subdomains.
Google says a fee-based advanced version of Apps for Your Domains is coming soon. The current free version includes site builder (you can build separate sites for up to 5 domains), email (2GB per user), group start page (customizable with 10,000 widgets), group calendar, and instant messaging. Lakehead University was the latest large scale deployment. Lakehead CIO Shahzad Jafri says he transitioned 38,000 users to Google's platform in under a week, saving $6 million in infrastructure costs and $2-3 million in annual maintenance.
If you think Google isn't in the web hosting market, you might have to reconsider...
PS - Check out HipMojo's list of other services Google could bundle:
* Docs and Spreadsheets
* Google Payment (what's the name again?)
* Google Maps (for directions to clients' offices, or meeting spots)
* Picasa (so you can see what people look like or people can put a face to their favorite salesperson's voice and name)
* Video player (for demos, presentations etc.)
* Analytics (prospecting tool par excellence, I mean most sales people rely on Alexa, not Nielsen Net Ratings or comScore)
* Blogger (so your clients can read about you, your products and services)
* Jotspot (so employees can share intelligence, or clients and salespeople can share information)
* Alerts (a prospective client announces something, you can hit them up ASAP)
* Finance (so you can check out the size of the company you are hitting up)
I would also add Google Base, where companies could create "stores" out of their product/service/event listings.
The registrars participating in this with them are going to find out that they may get stuck with customer support, did not make any money off the $10 registration, and will find it hard to upsell to add-ons because google is giving them all away for free.