This is probably the most glaring flaw in SaaS and cloud computing. Even the giants go down eventually. Couple that with your own ISP's issues and your potential downtime is doubled.
You know who got blasted out of sleep at 3 AM because my email was down? I don't know, but it sure as heck wasn't me.
I did too, and I didn't get much sleep in those days.
Only people who were unfortunate enough to be working on the GMail team from UTC+7, perhaps UTC+6, instead of in Mountain View.
In other words, this type of outage is pretty unlikely to ever plague Google again.
"Well, if my email is down, then my competitor's is too!"
I don't really know how much your argument applies to companies looking for hosted email; if they can't send, they can't send, so it doesn't matter if someone else can't receive. In fact, probably makes it better b/c they look less individually incompetent.
GE's central email farm went down when I interned there a couple summers ago. All 300k+ employees' emails went out.
The business is still affected by the outage if they host locally, there will probably just be more of them. And there's the illusion of control: GE had noone to blame but themselves (and the incompetent contractor who hit the big red button), whereas they could've pinned this on Google and felt worried about external risks and dependencies.