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Google and Salesforce Join to Fight Microsoft

Google and Salesforce.com, two of Microsoft’s most conspicuous rivals, are expanding a 10-month-old collaboration in an effort to accelerate their sales of customer management and office software to businesses.

On Monday, the two companies will announce that they have integrated Salesforce’s customer relationship management software and Google’s suite of office productivity applications, which includes e-mail, word processing and spreadsheets programs, into a single software package.

Like most of the software the two companies create, the package will not require a download or installation, but rather will be delivered as a service over the Web.

The offering will compete with Microsoft’s customer relationship management software, which is integrated with the its Office suite. The alliance could help Google, whose productivity programs are used largely by individuals, make inroads into businesses, where it is seeking to challenge Microsoft’s multibillion-dollar Office franchise.

Already customers of Google’s and Salesforce’s programs can use them side by side. But Dave Girouard, Google’s vice president and general manager, said the integrated offering would bring users new functions. (See CNBC interview with Salesforce CEO Marc Benioff at left.)

For example, users would able to keep track of e-mail sent to a customer right on that customer’s sales record, and a group of people collaborating on a sales account would be able to communicate by instant message with one another, he said.

“In the history of hosted software to date, applications could be like islands,” Mr. Girouard said. “They don’t really work together seamlessly. This is a first of its kind.”

Microsoft , which dominates the productivity software market but is a smaller player in customer relationship management software, or C.R.M., brushed aside concerns about competition from the Google-Salesforce alliance.

“Salesforce has belatedly recognized that it is important to link C.R.M. apps to productivity tools,” said Brad Wilson, general manager for Microsoft’s C.R.M. unit. “It has been core to our product since we launched five years ago. It validates our strategy.”

Google and Salesforce, two of the most important proponents of the idea of delivering software as a service over the Web, have grown increasingly close over the last several months. “The enemy of my enemy is my friend, so that makes Google my best friend,” said Marc Benioff, chief executive of Salesforce.com.

When Google introduced its package of productivity applications in February 2007, Salesforce was one of the few large companies committed to using the software. In June, the two companies began integrating Google’s AdWords advertising technology into Salesforce, and in November, Salesforce joined OpenSocial, an alliance of companies then led by Google that was establishing standards for creating applications for social networks.

Salesforce for Google Apps, as the integrated product is called, will be available to Salesforce customers at no additional cost starting Monday.

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