Salesforce.com and Google more than just partners?

Mike Arrington of TechCrunch offers his chessboard logic as to why salesforce.com is acquisition bait and reasons that the company is a good fit for being absorbed by Google. Phil Wainwright also played out the salesforce/Google union logic in this post, and found that the two companies would are very complementary, and could potentially "leave Microsoft in the dust."

Arrington lays out his logic for merging the two entities as follows:

Google is quite simply on a collision course with Salesforce. Google CEO Eric Schmidt recently said that Google is all about Search, Software and Ads. They already dominate search. In advertising, the next battle will be over auction exchanges. Google already picked its horse in that race when it acquired DoubleClick for $3.1 billion in April. Yahoo and Microsoft quickly acquired their own startups in this space as well - Yahoo bought RightMedia for $680 million and Microsoft acquired aQuantive for $6 billion.

That leaves software, and until last week it wasn’t clear exactly how Google would be competing with Microsoft’s dominance in the operating system and office space. But then Google introduced Google Gears. Google is now turning its office products into full offline applications. In the near future users will be able to use Gmail and Google Docs & Spreadsheets offline, with full read/write functionality. They’re bypassing the operating system (the browser is the new operating system) and their apps will now offer a real alternative to Outlook and Office. Small and medium sized businesses will no longer have just one real choice when loading (and paying for) software on their PCs.

And when you combine all that stuff with Salesforce’s CRM apps and developer platform, Microsoft has a real problem. The future of software delivery is the browser. Google’s betting on it. Salesforce has already made a business at it. And Microsoft, with Office Live and Silverlight, is placing some bets there too.

Google would have to do a Rupert--pay at least a 50 percent premium on the stock as News Corp. has offered for Dow Jones--and use a good portion of its $12 billion cash to acquire salesforce.com.

Google would get a very healthy on demand CRM business and a developing transactional application platform, which could buttress Google's enterprise business. It also would get an old style Oracle-style marketing and sales operation to sell into those enterprises.

However, it's a very different cultural fit. Salesforce.com spends more than half its revenues on those sales and marketing functions. Google is not doing much direct sales or Benioff-style marketing. Arrington also speculates that Microsoft would do everything in its power to prevent such a union. Oracle would not sit back either, and could bid for saleforce.com, despite Larry Ellison's major stake in NetSuite.

As a Google diversification strategy, getting serious about business software, a union makes sense, but so far Google has not shown that it has a super-serious focus on the enterprise. The company has shown that it is serious about the search and advertising business, and most companies at Google's stage don't manage major new initiatives that are not part of the original charter well, in this case a bottom-up, engineering approach to developing products and services for the mass market.

Arrington also said that Salesforce.com CEO Marc Benioff is "somewhat checked out" and signaling retirement. I don't believe that is the case. I have queried him on various issues via email, and no matter where he is in the world I usually get a response back in minutes. He seems fully engaged and running as fast as he can to move from on demand CRM provider to dominant on demand platform provider.

Tomorrow salesforce.com and Google are expected to announce a strategic alliance, perhaps a 'try-before-you-buy' union of sorts, that will likely give Google's applications and search preferred treatment in the salesforce universe, and Google with throw salesforce.com some bones as is standard in 'strategic alliances,' which most often are not game changing. It may be the first step toward full union, then again maybe not. All other opinions welcome...