The use of Google software in business is on the increase because the recession if forcing companies to look for cheaper alternatives, says CEO Eric Schmidt.

Schmidt said he has seen an a rise in the number of companies trying out products like its Search Appliance, for locating corporate data, and its Google Apps hosted productivity suite.

He attributed the increased interest from businesses to either the economy or a recognition that Google makes good-quality products. "Either reason is fine with us," he said.

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Google's main business is selling online advertising that runs alongside its search results and on other websites, but it has also been investing to build out its enterprise products business. Schmidt once said that if the bottom ever fell out of the online advertising market, the enterprise is Google's backup plan.

With the Search Appliance, Google found an underserved market of smaller organisations that lacked the money or the IT know-how to use more traditional enterprise search wares.

Google Apps, on the other hand, is riding a wave of interest in hosted business software, which tends to be cheaper to implement than conventional, on-premise software. This software-as-a-service approach has sent bigger vendors like Microsoft and IBM scrambling to adapt their collaboration applications accordingly.

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Not that Google is taking its eyes off of its core market. Google doesn't believe the search advertising market is 'settled' because there is still a lot of opportunity for innovation, Schmidt said, and competitors large and small are busy perfecting their search technologies.

One service Google doesn't view as a direct competitor is Twitter, which was created by former leaders of Google's Blogger service. Schmidt praised Twitter as another way to communicate online, but he also called the service "a poor man's email" and wondered whether it will remain a standalone service or become a feature of email systems.

Addressing the economy, Schmidt called it a dire situation and said that Google isn't immune to the crisis, which he doesn't expect to lift until at least next year.

See also: Google Apps dashboard provides downtime details