Google's valuation now stands at $124 billion. How big is that? For reference, IBM is worth $173 billion. Once the big, friendly St. Bernard of tech companies, Google has turned into Godzilla overnight. And it's better positioned than Microsoft ($204 billion) to capitalize on the Web-centric future, from mobile to social networking to converged TV to cloud computing.
With the E.U. and the FTC breathing down its neck, Google must be careful to avoid pushing its domination of search and online advertising into monopoly territory (the recent $750 million Google acquisition of AdMob, a mobile advertising startup, seemed to barely squeak by). So what other opportunities for growth does Google see in the near term? The recent Google ad campaign to induce Office users to forget about upgrading to Office 2010 and adopt Google Docs should give you an indication.
[ Read Robert Scheier's article "Can Google really hack it in business?" | Last October, the InfoWorld Test Center pitted Google Docs against Zoho and a beta version of Office Web Apps. ]
Up until now Google hasn't seemed terribly serious about the business software market. Gmail has made some headway in business, but the paid version of Google Apps -- which includes Docs, Gmail, Sites, Wave, and a three-nines SLA for $50 per seat per year -- can't be too successful, because Google still won't say how many customers have gone for it. We keep hearing about the same high-profile wins at Genentech and the city of Los Angeles.
So assuming Google really does want to get serious, why not buy Salesforce.com? When it comes to successful SaaS (software as a service) applications, there's Salesforce.com and everyone else. One big reason is that, unlike most Web-centric companies, Salesforce really knows how to sell applications to business, something Google is just beginning to learn. Plus, thanks to an alliance struck in 2008, Google Apps is already integrated with Salesforce.
Google I/O last week provided yet another indication of the two companies' converging interests. Just as VMware and Salesforce struck an alliance last month to enable Java applications to run on the Force.com cloud development platform, VMware and Google announced a similar arrangement for the Google App Engine platform. (Java apps already run on Google App Engine, but the VMware deal makes it easier to migrate them.)
Ultimately, larger businesses aren't going to make any major moves to the cloud unless they have a platform for developers; after all, custom-built apps always seem to make up half of enterprise applications. Now, Salesforce's Force.com is a great platform, but it doesn't appear to have much traction outside of Salesforce's existing CRM customers. Google App Engine is just getting off the ground, but it has the company's enormous resources behind it. Imagine if the two joined forces.
With Google Docs, Salesforce, dev in the cloud, and Google's monster infrastructure, you have the makings of a powerhouse cloud ecosystem. Let me be clear: I have absolutely no inside information. Salesforce is valued at $9.8 billion, which is quite a meal even for Godzilla -- and more than three times the $3.1 billion Google paid for its biggest ticket item so far, Doubleclick. And I have no idea how Salesforce's vociferous CEO Marc Benioff would react to such a proposition.
But if Google wants a piece of the action in this area, what other choices does it have? Microsoft is fighting back against Google Docs with Office Web Apps, due to come out of beta next month. And Google has no play at all in the enterprise application market, which according to the research firm AMR hovers somewhere north of $60 billion in size. Salesforce claims that it's "the CRM choice of 72,500 companies." If Google wants more than a token number of paying business customers in the near term, it's going to have to buy them.
This article, "Will Google buy Salesforce next?" originally appeared at InfoWorld.com. Read more of Eric Knorr's Modernizing IT blog and get a digest of the key stories each day in the InfoWorld Daily newsletter and on your mobile device at infoworldmobile.com.