Google, Salesforce.com Discuss Alliance
SAN FRANCISCO — Salesforce.com Inc.'s stock price climbed by more than 4 percent Monday in response to a report that the online software pioneer is poised to team up with Internet search leader Google Inc. in a double-barreled attack on Microsoft Corp.
Context & Ripple Effects
This lands on top of the same-day Wall Street Journal report that Google and Salesforce.com are weighing an alliance aimed at Microsoft — so the AP piece is the market's first read on that story, not new news. What is confirmed is the market reaction: Salesforce.com stock climbed more than 4 percent Monday on the talk.
The substance itself remains unconfirmed — both companies are only 'reportedly poised' to team up, with no announced product, deal terms, or joint statement. That gap between rumor and a double-digit-percent-cap move is the real signal: investors are pricing in what a pairing of Google's search reach with Salesforce's hosted CRM model would do to Microsoft's desktop-bound franchise.
First-order effects
- Salesforce.com shareholders get an immediate paper gain — the stock's more-than-4-percent climb values the rumored partnership before either company has confirmed it exists.
Second-order effects
- If the alliance firms up, Microsoft faces a two-front pitch — Google's ad-and-search distribution married to subscription CRM — aimed squarely at its Office and business-software lock-in, forcing a defensive response in how it prices and packages those products.
- Other application vendors selling over the web would face pressure to line up their own search-engine distribution deals, since the rumored pairing implies customer acquisition is shifting toward search placement rather than sales forces.
Third-order effects
- A confirmed deal would mark enterprise software competition reorganizing around web-native alliances — hosted applications plus search-scale distribution — rather than around any single vendor's installed base, with Microsoft's bundling model as the thing being attacked rather than the template.
The trend: Enterprise software competition in 2007 is consolidating into web-delivery coalitions — applications rented over the network and acquired through search — against the desktop-suite incumbency.