What Google's Enterprise Biz Means for Microsoft

Santa Claus Rally Eyed for Online Leaders Apple, Amazon and Google

Google's growing its enterprise software business and Microsoft—which has long-dominated the business software market with its Windows products—has a reason to be nervous, Brent Thill, an analyst for UBS, told CNBC.

"There's no question the competitor barrier has come down," Thill said. "There's a collision coming and the question is who can move into the other's camp."

Microsoft Windows has been the major player in the enterprise software space for years, tailoring its services for large businesses. Google's software apps, though, have been widely adopted by consumers and small businesses.

Now both companies want a piece of each other's pie, and while it's unlikely Google apps will be a Windows killer, Microsoft still better take heed, Thill said.

"Never say never, however, I don't think you are going to see a mass change overnight," Thill said. "I think Google's onto something. Microsoft is definitely more concerned... Google is changing the game and Microsoft is going to have to adapt...Microsoft follows, they don't lead."

The search giant took another step Thursday in growing its revenue from its enterprise apps service when it announced that it would start charging companies of all sizes to use its apps—including Gmail—for work. (Previously, the company only charged business with 10 or more employees.)

Thill said Google's move to start charging all businesses for its apps software seems the logical step considering it had to offer its services for free in the beginning to entice people to try its products. However, just because all-size businesses are now being charged doesn't mean that Google's enterprise software is necessarily cut out to support larger businesses, Thill said.

"It's certainly very compelling for Google. If you are doing very basic things, I think Google is going to be fine. But for larger enterprises, they will probably never go there, certainly not overnight," he said.

While Thill said the enterprise market is currently big enough for both companies to be successful, Microsoft better keep close tabs on Google because it has a track record of disrupting markets quickly.

Google's smartphone OS Android became the world's most widely used smartphone platform in just a few years after the first Android-powered phone launched and soon tablets running Google's OS are predicted to overtake Apple's iPad dominance.

"They are planting seeds in mobile, small business, they're more proactive in voice technology, there's no question Google is spreading their wings into other technologies to field new levels of growth," Thill said. "You give bigger credit to Google for disrupting the market. They have nothing to lose. Microsoft has no record of mixing things up,"