Google Music, Android 3 to launch before the holidays

According to a report out of Israel, Google will launch its Google Music service alongside its Android 3.0 platform in either fall or winter this year.

Google's Cloud  music service at Google I/O earlier this year wowed the audience.  The presenters clicked a button on a web page and magically music appeared on their Android phones. A Israeli report now says that this service will go live toward the end of the year.

Google (GOOG) will also be releasing the next generation of its Android operating system "Gingerbread" at that time, said Google Android product manager, Gaurav Jain.  He said that music would be a major factor in the new version of Android and that its success is very important in Google.

Theoretically, GoogleTV, which runs off of the Android OS, will be receiving a branch of that OS, and with it, will be able to stream music (and movies?) as well.

Although the name of the service hasn't been officially clarified, the logo for 'Google Music' was discovered last month on Google's servers.

Google already derives money from sales of music through its YouTube subsidiary and will be able to use YouTube and its Google search as a major driver of traffic to its new service.

Google is racing Apple (AAPL) to the Cloud streaming business, which will compete with the current generation of music services, dominated by Apple's iTunes.