AT&T today unveiled its Synaptic Compute as a Service product that will use hardware from Sun Microsystems and software from VMware to provide businesses with computing on demand backed by a guarantee of 99.9 percent availability. The product, which will compete with Amazon’s Ec2, Rackspace’s CloudServers, GoGrid and several planned offerings from the likes of IBM, Savvis and Terremark, is one of several web-based offerings from AT&T. Other products include storage as a service and a custom-built platform as a service.

In such a crowded marketplace, AT&T will have to do a lot to stand out, but Steve Caniano, who is a VP in AT&T’s hosting and application services business, said the company’s network assets will help its Synaptic products win out, something we pointed out last year when AT&T embarked on its voyage to the cloud. The ability to link the AT&T cloud to the customer’s data center over the AT&T network will help the customer automatically switch to a public cloud when its own data centers are full, or even create virtual private clouds for the client’s off-premise computing-on-demand needs. AT&T’s eventual goal (a common one in the industry) is to enable customers to move their computing around the world either following demand, lower power prices or whatever makes sense for the customer. AT&T may have another advantage as the company has experience billing folks for small increments of service, thanks to its days of charging people for calls by the minute.

Now that we’ve got a real compute cloud from a network provider, I can’t wait to see how the battle for cloud domination manages to work itself out. If AT&T can do this well, enterprise customers will be interested.