Google and Salesforce.com's Partnershp to Step Into Enterprise Arena Will Likely Make A Splash Only with SMBs

Salesforce.com and Google announced today that they are deepening their partnership by integrating Google Docs (an online spreadsheet and word processing tool) with Salesforce.com's online CRM solution. This is supposed to be a shot across the bow of Microsoft's enterprise business. The problem is that, for all the hype about web 2.0 and hosted apps, enterprise businesses are going to remain wary about putting too much of their data "in the cloud." As one commenter on Scoble's blog said "if enterprise data - HR, SCM, Financials, data warehouse - is not involved, it’s not an enterprise app." I think SFDC & Google are more likely to gain traction with smaller businesses - which is definitely a key market for Microsoft - and won't likely further Google's strategy to siphon away Microsoft's bread and butter enterprise and upper-mid-market customers. Even though Marc Benioff likes to talk a big game, it's more probable that, as Microsoft's Dynamics CRM improves its scalability for the enterprise, the market will fragment between small bizes opting for hosted systems like SFDC (and don't forget Microsoft CRM Online) and bigger players who want their data behind a firewall and opt for less volatile (and, yes, less sexy) Microsoft.