Google, Salesforce.com Partnership Buzz Grows

Through both words and actions, executives from Salesforce.com and Google have made clear they hold each other in high esteem. Just how deep that mutual admiration runs is suggested by a report in Monday’s Wall Street Journal that the two companies are working through details of a potential partnership.

Possible developments from the reported tie-up could be a Web-based tool for integrating Google’s Gmail and instant-messaging with Salesforce.com’s CRM (customer relationship management) services, according to the WSJ.

Taking Aim at Microsoft

The larger aim of the partnership, though, would likely be ratcheting up competition against the two companies’ common enemy: Microsoft.

Redmond has taken direct aim at Salesforce.com’s bread and butter with its online CRM offering. Google, now that it has admitted part of its business plan is to move onto the desktop, is taking on a formidable opponent in Microsoft.

“Microsoft has been talking about its upcoming Software as a Service (SaaS) application for awhile, so there is strength in numbers if the two band together,” Rob Bois, an analyst with AMR Research, told CRM Buyer.

Wall Street loves the idea of a deal — at least for Salesforce.com, Bois noted. The company’s shares rose nearly 8 percent on news of the talks to US$49.40.

“Certainly, they have complementary product strategies and similar styles in management and the way they support innovation,” Rebecca Wettemann, vice president of Nucleus Research, told CRM Buyer.

“Given the temperament and nature of the two companies, this could be an interesting match,” she said.

Beyond Microsoft

The partnership, though, is clearly going to involve more than just hunkering down — or charging forward — against Microsoft. Both companies are known for their innovative, forward-looking business strategies. A marriage between the two is bound to yield a genius child, conventional wisdom would suggest.

Little is known about the two companies’ long-term plans, though, and theories about where they might take this relationship are highly speculative, Denis Pombriant, founder and principal of Beagle Research, told CRM Buyer.

“It could be about CRM — Google has ambitions in this space,” he said.

“I suspect, though, that the announcement will be something bigger. I think the place where Google and Salesforce.com would intersect the best is in the application development and deployment realm,” Pombriant ventured.

“This could go in a lot of different directions,” Wettemann observed. “Salesforce.com has built a lot of extensions around collaboration and individual productivity.”

She also pointed to one announcement coming out of Salesforce.com’s Developer Conference, which kicked off Monday. Called “Salesforce SOA,” it enables service-oriented architectures to run as a service on Salesforce.com. Users can thus build SOA-based business processes.

“Linking applications via Salesforce.com to Web services that are provided by Google or through Google is a tantalizing possibility,” Wettemann said.

“Salesforce.com has a lot of application developers working to deliver innovative new solutions to marketplace,” Pombriant noted. “[Collaboration with] Google, with its enhanced market reach, would be a smart development for both companies.”

Google and its competitors have been focused on broad-based nonspecific apps like office automation, he pointed out. “What Salesforce.com can bring to table is a database application that can span a broad spectrum, and an application that store and access unstructured data. Both of those areas require some specialization that a company like Google doesn’t possess innately.”

Prelude to an Acquisition

Indeed, the synergies are so intriguing that speculation is growing over the possibility that the partnership agreement may be a prelude to an acquisition. Indeed, many acquisitions begin as partnerships — and this is not the first time such rumors have come up.

AMR Research’s Bois, for his part, thinks such talk is misplaced. “Google and Salesforce.com have similar ideologies — they are two of the biggest SaaS providers out there. Both share a common enemy in Microsoft and even, to lesser degree, SAP and Oracle. Beyond that, though, the two don’t serve a common customer base.”

What they have most in common, he said, is their rivalry with Microsoft, although they compete on different levels. Microsoft Live is the natural competitor to the light productivity tools Google has released. Salesforce.com competes with the Dynamic CRM application.

For that reason, Bois said, he doesn’t think Microsoft is going to suffer a serious blow if these two firms join forces.

Not that it isn’t a great idea, he allowed. “From a marketing standpoint, it is hard to beat a partnership with either of these firms.”