Internet giant Google Inc. took the software battle deeper into Microsoft's territory with a new package of online services for small-business users.

Google said it would offer businesses tailor-made versions of its free email service Gmail, instant messaging, voice calling, shared calendars and basic design, publishing and hosting of websites.

"Google is on a relentless release-after-release path to put itself squarely in Microsoft's headlights," Forrester Research senior analyst Matthew Brown told AFP.

"It changes the dynamic in an area where Microsoft has made its home for years."

The Mountain View, California, company is marketing its "Google Apps for Your Domain" service to smaller companies, non-profit groups and universities that want a range of corporate IT services without the cost.

The service expands on basic online software already offered by Google such as word processing and spreadsheets that analysts say are part of a strategy by the search titan to take on industry leader Microsoft at its own game.

Dave Girouard, vice president of Google's enterprise group, said the new package "eliminates many of the expenses and hassles of maintaining a communications infrastructure, which is welcome relief for many small business owners and IT staffers".

"Organizations can let Google be the experts in delivering high quality email, messaging, and other web-based services while they focus on the needs of their users and their day-to-day business," he said.

While Google has been careful to maintain that its release was not aimed at the heart of Microsoft's software empire, analysts said that was its trajectory.

"It would appear Google is attempting to relearn the lesson Netscape learned," said Rob Enderle, senior analyst of Enderle Group in Silicon Valley.

"By trying to shoot at the enterprise market first, they are just asking for a catastrophe. Netscape is the perfect example of that."

Enderle recounted how Netscape nearly went out of business during a similar battle with Microsoft.

The enterprise server market is made up of large corporations that make decisions based on lengthy business cycles and relationships measured in decades, according to Enderle.

"If you are a new vender, you are not even on an even playing field," Enderle said. "You have to be a lot better."

Google is betting there is an untapped mass market of business that would prefer to use software online for free instead of paying to lease it from Microsoft, according to analysts.

"The big red flags that come up are privacy and security," Brown said. "But, so far Google has been pretty successful at getting people to hand over some privacy for service."

Google has a firm track record as a rapid-fire innovator, while Microsoft has stumbled lately with delays in the releases of its new Vista operating system and SharedPoint business software.

The online search juggernaut also has incredible momentum, cash reserves, and popularity, Brown said of its potential as a contender against Microsoft.

"Google has been able to create excitement and has been releasing compelling products each month," Brown said. "If it is perceived as the anti-Microsoft around capabilities, that is not a bad thing."

Google is forcing a broader discussion about business software as an online service instead of something bought and installed on company computers, according to analysts.

"Office Live has a whole lot more, but the long term bet for Google is that its software is good enough for a whole line of folks," Brown said.

"If there is anyone that would feel nervous about this, it is the IT guy in the (small to mid-size business) space."

In another announcement Monday that underlined its migration away from offering just Internet searches, Google said it had struck an alliance with online auctioneer eBay in online advertising.

Under the deal, Google advertisers will be promoted on eBay's auction websites around the world from early 2007 as the two companies seek to increase online commerce through the use of emerging Internet telephony services.