Too Close for Comfort? Inc.'s recent agreement with Google Inc. to bundle Google Apps with's hosted customer relationship management (CRM) applications could prove troublesome for Dynamics partners if these two Microsoft competitors cement their already cozy relationship.

In April, the companies announced that customers using's CRM offering now have access to the Google Apps productivity suite within the platform. The new combined package is called for Google Apps, and Google Apps is available free to customers.'s CRM applications integrate with Google Apps' calendar, e-mail and instant-messaging applications. Users can have e-mail activity automatically tracked within's CRM application, preserving communications associated with sales activities. They can also share documents and proposals using Google Apps' collaborative functionality.

Validating Redmond's Strategy
This summer, San Francisco-based plans to offer a supported version of Google Apps and a supported version of for $10 per user per month, company officials said.

Microsoft officials say that the linkup validates Redmond's strategy. Microsoft recently made available Dynamics CRM Online, a hosted version of its Dynamics CRM apps.

"What they're doing is marrying CRM with personal productivity apps, and that's been our strategy since we launched five years ago," says Brad Wilson, general manager of Microsoft Dynamics CRM at Microsoft. "It's what we've done since our program's inception."

But it's not that simple, according to Kraig Swensrud,'s vice president of applications. Swensrud maintains that customers are "free from the limits of software" in a way that users of Microsoft's Outlook and Office aren't. "Companies shouldn't have to download, install, patch, maintain anything-they should buy from the cloud," he says.

Beyond all that, though, the relationship could spell trouble for Dynamics partners if Mountain View, Calif.-based Google eventually acquires its CRM partner. That's a move that Reed Overfelt, COO of Reston, Va.-based Mural Ventures, a consulting and venture-capital firm specializing in Software as a Service, sees as imminent.

"Everyone we talk to is saying that this is a no-brainer," Overfelt says of a Google buyout of

And that could be a problem for Dynamics partners, he says, because Google would have the capital to purchase not only, but some or all of the third parties that participate in's popular Appexchange program. (Both Swensrud and Wilson declined to comment on a potential buyout.)

Creative Collaboration
With Appexchange, third parties can post now Google Apps-add-ons; customers can then test-drive them and download them for their systems. The program also includes a message board through which customers and vendors alike can post ideas for apps they've created or would like to see created.

Overfelt, a former Microsoft regional general manager, says that Microsoft currently doesn't have a system that's as capable as Appexchange in producing customer referrals and sales leads. As a result, he says, even ISVs loyal to Microsoft are looking at defecting-or at least branching out.

"There's a kind of momentum around Appexchange today," Overfelt says. "Microsoft's partners are very loyal to the company. We've talked to quite a few of these ISVs and every single one of them has looked at as a potential platform for their apps."

Appexchange has been a hot property for, he says, noting that one vendor posted an idea to Appexchange and "got a call back in two hours from [venture capitalists] that wanted to give him money."

Appexchange also has lots of intellectual property that Google could use to quickly and effectively compete with Dynamics, Overfelt says: "What [Google] will buy is a very interesting platform that has an exchange with a ton of very interesting horizontal and vertical intellectual property in it. Google could go to market and use this massive sales team to start selling these vertical applications to people. For a typical Microsoft VAR, that's bad news. For a Dynamics VAR, that's incredibly bad news."