Google and Salesforce: Why Don't They Just Merge?

The worst-kept secret of the last week - Salesforce.com (CRM) integrating Google (GOOG) Apps into its CRM applications and validating the search giant’s Office killer - is official, but in the grand scheme of things this partnership could be viewed as a precursor to future merger.

The basic gist is this (Techmeme): Salesforce is integrating Google Apps into its applications. As Phil Wainewright notes: Salesforce is embedding email, documents, online chat and integrated calendaring directly into its core sales force automation, marketing and customer service applications. Garett Rogers has been noting that Google Apps is becoming a thorn in Microsoft’s side. Salesforce made the announcement via its blog overnight.

Add this latest integration effort together and you come up with the following: Google is serious about the enterprise and is looking for distribution of its office suite. Salesforce sees some synergy and a nice add-on. Each company views itself as a platform-as-a-service player and could they collide at some point in the future.

Wouldn’t it make sense for these two companies to merge? I always figured Salesforce would wind up with Oracle (ORCL)–or even Microsoft (MSFT) or SAP (SAP). However, Google would also be a very logical acquirer. Last week, I noted that IT execs are very interested in what Google can do in their companies. They’re just not quite sold yet and are wary of depending too much on Google’s cloud. A purchase of Salesforce would get these IT fence-sitters off the fence rather quickly.

To be sure, Salesforce wouldn’t be cheap–its market cap is $7.3 billion–but Google could afford it, keep Microsoft CEO Steve Ballmer up for a few weeks, and take the software giant’s best move off the table. I’d argue that if Microsoft really wants to get this Web thing down, it should drop its unhealthy infatuation with Yahoo (YHOO) and buy Salesforce, Omniture (OMTR) and a few others with its $40 billion plus.

This merger between Google and Salesforce won’t happen today, but as you read the endless coverage about Office 2.0, the computing cloud and all the other stuff, keep in mind where this thing may really be headed.

Also in case you missed it: SAP Chairman Hasso Plattner and Salesforce.com’s Marc Benioff squared off at the Churchill Club a few weeks ago and caused quite a enterprise software dust-up.

We recapped the debate at the time and questioned whether Benioff was overestimating his company’s platform. Here’s the short version of the video in case you missed it.

Comments

[fence sitter:]

Well then I guess I better go all in on Salesforce....how come Google doesnt want to pay 70+ a share for CRM....They can just give them some GOOG shares and MARC can sell those too

2008 Apr 14 02:05 PM

[Jonathan Scott:]

In a few years, Google and Salesforce.com will have a package almost as good as Office 2003.
This might be of concern if MSFT mgmt sat around the office, drank beer, and watched ESPN all day. Since this is not the likely scenario, MSFT has little to worry about. GOOG has won one battle, but MSFT never gives up and is currently focusing on the next battlefield. SeekingAlpha enjoys writing that MSFT is under attack. The question is with 90%+ marketshare, who else should everyone be attacking? AOL? Netscape? Oops, MSFT did away with them years ago.

2008 Apr 14 04:30 PM

[calvino:]

It's true, you are right, Google had 200 million of sales last year for their online apps. They are really crushing SAP, Oracle and MSFT. And you are right there with them. Larry Ellison and Bill Gates and Henning Kagermann tremble at the sound of your name. Can you do a laptop review next week, mine is getting old and I don't know which one to get thanks in advance, and don't do any more finance, ok, just stick to software reviews.

2008 Apr 15 03:14 AM

[GregY:]

Why on Earth would Oracle want to buy Salesforce.com? Larry already have acquired more companies/products in that space that they know what to do with, and these do have licenses and support cash flow under contract. Functionally, CRM integration with email/tasking/calendar... is an absolute necessity, and every customer's investment into this on their own is wasteful, but this "half baked" alliance is yet to show they can do it right. There is more ways than one to skin a cat.

2008 Apr 15 10:20 AM