Google and Salesforce.com on Monday announced the integration of Google's web-based suite of personal productivity applications and Salesforce's web-hosted customer relationship management application.

The integration, the first major news to emerge from an alliance the two firms announced last June, meshes CRM, a popular business application, and Google Apps, Google's email, spreadsheet, and word-processing applications.

The deal fills in missing pieces for both companies as they continue to face off against Microsoft in the Microsoft-dominated business applications market.

But with Microsoft's mature sales and support structure along with its standing army of partners and its own on-demand CRM product, CRM Online, in the works, Google and Salesforce face a daunting task.

"We don't see this integration having major impact on Salesforce, Google, or Microsoft," said Rob DeSisto, an analyst with Gartner. "I can't see a lot of business customers switching from Outlook because of Salesforce' CRM integration with Gmail."

The integration of Salesforce's CRM application and Google Apps create significant business benefits including the ability to share business data with colleagues or customers in popular Google Apps.

But some of the same benefits exist between Microsoft's Outlook and Salesforce's CRM application, Mr. DeSisto said, so the Google Apps/Salesforce CRM integration is simply Google playing catch-up.

"Salesforce.com has made a very late recognition of what has been our strategy all along to marry CRM applications with personal productivity tools," said Brad Wilson, general manager of Microsoft Dynamics CRM. "This is trailing edge stuff from Salesforce.com."

In October 2006 Google introduced Google Apps, a suite of free personal productivity applications targeted primarily at consumers and schools. But the Mountain View, California-based search firm has sought to extend its Google Apps market to businesses with Google Apps Premier Edition, a higher-end, for-pay, version of the original.

San Francisco-based Salesforce, which previously announced the integration of its CRM application with Google's AdWords, can benefit from the strength of Google's name and the growing popularity of Google Apps.

On the other hand Google, which does not have an extensive list of business applications, gets a much-needed  entree into the on-demand business apps market through Salesforce.

"This is targeted at Microsoft Office, and the sweet spot for Google/Salesforce is lowering the total cost of ownership for large enterprises and giving deep integration to SMBs with Google Mail which is very popular," said Sheryl Kingstone, an analyst with Yankee Group.