Content Matters

The announcement this weekend that Google Apps and Salesforce.com have more tightly integrated is a clear shot across the bow for Microsoft that Google (NASD:GOOG) is serious about entering the business software market.

Until now, Google Apps have been interesting but they haven't been viable tools for business users. This integration won't make business users abandon MS Office but it does give Google the chance to expose business users to the apps.  I wouldn't be surprised to see other AppExchange partners also leverage this partnership. For example, there are mail merge programs on AppExchange that could easily add support for Google Docs & Spreadsheets.

The biggest benefit that I see for Google in this deal is that it enables them to tap into the Salesforce.com (NASD:CRM) sales force, which has already built a substantial customer base (1 million plus paying users) who have already bought into the Software-as-a-Service model.  They can slowly test the appetite for "office on a cloud" without the expense and distraction of building up their own sales and support teams. Obvious targets are small businesses, nonprofits and companies with a decentralized IT infrastructure.

The biggest near-term impact could be to further slow the adoption of Office 2007. Uptake of the new version of Office has been slow and this, along with the slow economy, gives corporate IT departments another reason to wait before upgrading.

I'd previously echoed analyst suggestions that Microsoft could be better served by abandoning its pursuit of Yahoo and instead buying Salesforce.com.  It looks as though Google has made that unlikely. The one remaining question, as posited by Michael Arrington, is why Google doesn't just buy Salesforce.