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What do an allied Salesforce.com and Google mean for Microsoft CRM?

Reports of a partnership between Google and Salesforce.com sent stock prices up yesterday, but what the combination will look like remains a mystery.

Salesforce.com's stock shot up yesterday based on a report in Monday's Wall Street Journal that the Software as...

a Service (SaaS) vendor and Google were discussing a partnership to compete more directly with Microsoft.

Citing sources "familiar with the matter," the journal reported that the partnership could integrate Google's online services such as email and instant messaging with Salesforce.com's CRM application and will be announced in the next few weeks.

A Salesforce.com spokesperson said the company will not comment on industry speculation.

As Google extends beyond search and enters the applications market, Salesforce.com, with its well-established SaaS business that includes an extensive group of partners building on-demand applications on AppExchange, could make a good partner, according to analysts.

"It makes a lot of sense when you think about it," said Laurie McCabe, vice president of SMB insights and solutions with New York-based AMI Partners International. "Salesforce.com is really already in and experienced with its online apps business. The two together will be pretty interesting."

Google recently released a series of free, Web-based personal productivity applications as an alternative to Microsoft Office. They include word processing, calendar, spreadsheet and, most recently, presentation applications. @36875

Demand for the applications, particularly among businesses, remains tepid, however. A survey of 270 small businesses around the globe conducted by AMI Partners found that the majority do not even know about Web-based personal productivity software. When informed, a majority in the U.K., Brazil and India said they would be willing to accept advertising alongside their personal productivity applications in exchange for free online software, while 44% in the United States said they wouldn't mind viewing ads.

Just what a combined Google-Salesforce.com alliance would look like or whether pricing would be based on Salesforce.com's subscription model or Google's paid advertising model remains to be seen, but the target of the two is pretty clear.

"They're very united in their goal," McCabe said. "Everything's done online and everything supersedes what Microsoft does."

Microsoft is planning its own suite of Web-based applications on its Live platform. The first to arrive will be its SaaS CRM software, scheduled for release to manufacturing in the fourth quarter of the year. It will feature integration with Outlook and run in Microsoft data centers.

"Salesforce has some great content in its applications and the applications of its partners," said Denis Pombriant, managing principal of Stoughton, Mass.-based Beagle Research. "Google, I think, is looking for more things to make available to its customers and can provide Salesforce with some good market reach. One of the things Salesforce brings to the party is the specificity of applications -- CRM and the long-tail applications many of its partners are developing. That specificity is one of the reasons Google is so interested."

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