Eric Schmidt joins Marc Benioff in an assault on the old guard

In a dinner theater setting at the Four Seasons in San Francisco, Salesforce.com's Marc Benioff and Google's Eric Schmidt officially rolled out Salesforce for Google Apps, the integration of Google Apps, Gmail, Calendar, and Google Talk with the Salesforce.com platform, in 15 languages.

Salesforce.com CEO Marc Benioff and Google chief Eric Schmidt.

(Credit: Dan Farber/ CNET News)

Benioff said one of the goals is to "get rid of the albratross of IT."

I think Microsoft is still a dinosaur. More than ever, it tries to hold onto its monopolistic position around technology that they hold, whether it's SQL Server, whether it's NT, whether it's Windows, whether it's Office--these are their cash cows they don't want slaughtered.

"Customers are demanding a new generation of software, and the standard bearers of the previous generation have not stepped forward," Benioff said during the rollout event. "The power will be to run your applications in the cloud," he proclaimed. Coincidentally, Microsoft is launching on Monday the first day of the free 30-day trial of Microsoft Dynamics CRM 4.

Schmidt also gave his take on the alliance of Google and Salesforce.com. "We know what it takes to build this next generation of services," he said. "You need a company with values," he said, citing the social responsibility leadership of Salesforce.com. Importantly, he said, Salesforce.com figured out the model for making money selling services from the cloud. "That model is the defining model of the new computing cloud age," he said, and it is "a 20- or 30- or 40-year vision."

"Although the two companies are working in the same space in different ways, the models are getting closer and closer. The clouds are beginning to merge," Schmidt said. Google has even changed its tag line to reflect its investment in applications, from search and ads to search, ads, and apps.

(Credit: Google/Salesforce.com)

Now the question is whether enterprises will be attracted to the merged clouds. Salesforce.com is eating its own dog food, moving its entire company to Salesforce.com for Google Apps. It's a viable, and extremely low-cost, alternative to Microsoft Word, Outlook, Excel, and related products. Salesforce.com has integration with Microsoft Office, but no equivalent to Gtalk.

For customers who need offline capabilities, Salesforce.com provides support. Dave Girouard, general manager of Google Enterprise, said that Google is committed to making all of its apps available offline via Google Gears. (Google Docs currently has offline support.) "As the Internet becomes more persistent it becomes less of an issue," Benioff said.

According to Girouard, Google Apps, at $50 per user per year, has 10x better economics than a well-provisioned suite of Microsoft Office products, which would include some administrative support. Rebecca Wettemann of Nucleus Research told me that the difference between a Google and Microsoft solution on Salesforce.com differed by a couple orders of magnitude, and that the Salesforce.com alliance gives Google a sales channel. She also noted that companies should take a tiered approach; some users might need Excel and others could do fine with just the spreadsheet in Google Apps.

This locking of arms by Benioff and Schmidt should force Microsoft to show its hand sooner than later. On April 24 in San Francisco it plans to offer more details on its Live Mesh service, which reportedly synchronizes data between a variety of devices. That won't quell the call for a nearly free cloud-based, collaborative suite of applications as Salesforce for Google Apps gets some traction.