SaaS, Google, and Salesforce.com

Reports out of ComputerWire in late May suggest Google and Salesforce.com may be ready to form an anti-Microsoft alliance that could result in an on-demand service that integrates Google's online services—e.g., email and instant messaging—with that of Salesforce.com.

For Google, such a partnership could be part of a long-range plan to counter Microsoft's emerging software-as-a-service (SaaS) plans. While Microsoft Live services are said to be insubstantial at the moment, Microsoft is throwing the weight of the company behind the concept of software and services, and SaaS has finally become an important strategic development.

Google and Salesforce.com could offer a package of Google productivity and Salesforce.com business applications as an alternative to the Microsoft Office and business applications set.

On the flip side, reports indicate Microsoft is showing just how seriously it takes its rivalry with Yahoo! and Google in its move to buy online advertising company aQuantive for $6 billion.

If the deal closes, it will be Microsoft's largest acquisition in its 32-year history. The ad company had sales of $442.2 million last year, yet Microsoft's online services group is in fact larger by revenue than aQuantive as a whole. Additionally, the Microsoft-aQuantive deal is worth about 13 times aQuantive's 2006 annual revenue, and about 10 times what analysts on average were predicting for 2007 revenue.

Such a large deal will be subject to competition regulators around the world, and Hart-Scott-Rodino approval in the U.S.