Silicon Valley neighbors Google and Intuit have announced a major partnership. On a conference call yesterday afternoon, Google CEO Eric Schmidt and Intuit's Steve Bennett sketched out how the next version of Intuit's popular QuickBooks accounting software will connect directly to several Google services, including AdWords, Google Maps, and Googlebase, a free classifieds-like marketplace. Search Engine Watch says the development could have "sweeping implications for local search and small-business online marketing," noting that Quickbooks has 3.7 million active small business users, many of whom are not yet online.

Thanks to the integration, small businesses will be able to create ads on Google search pages, and place their businesses directly onto Google maps. SEW says the deal was "quickly put together for the 2007 release of QuickBooks" and will eventually be extended to Intuit's Quicken, Financial terms of the deal were left hazy. Vague comments from Schmidt about revenue and cost sharing were "basically a non answer," says Michael Arrington at TechCrunch, "although it's clear Google is making payments to Intuit pursuant to this deal."

Google shares, however, which had been climbing this week, are off nearly 4% today, while Intuit remains largely unchanged. Still, web pundits generally appear to think the deal is a smart one. Perhaps the most intriguing, if entirely speculative, comment comes from a TechCrunch reader and Silicon Valley native: "Just recently I was driving down Shoreline [Boulevard], and remarked that the only way for Google to get some more real estate close to the campus was to buy Intuit...." Interesting point. Could this be a prelude to a much bigger deal?