Why do you care what products Google uses internally? Without knowing anything about your intended use case, Google are likely facing a pretty different set of requirements, and they probably have a very different set of resources (e.g. they obviously have a lot of in-house expertise on how the Google Apps suite works).

You're joking, right?

Google uses its own products. They live in GMail and Calendar.

They use google apps.

Citation?

The googlers I've talked to have said they use gmail and google docs internally.

I can also confirm that

Google uses pretty much all of their own products internally. Notably, the corporate version of gmail, and Google Calendar.

Here's a cite: http://blogoscoped.com/archive/2008-03-12-n39.html

Gmail runs on the Google GFE/1.3 server, which is hosted on a Linux Operating System. See here http://en.wikipedia.org/wiki/Gmail

Exchange email is acceptable but not outstanding. The reason that most companies end up with Exchange is the good calendaring support.

Try your free or less expensive options first and see what your employees think. At our company (back when we were a startup) our first IT hire's first job was to install Exchange -- the executive team was absolutely done with the inferior product that we were using before it.

Another reason you may wish to not use a hosted environment: your company's data can't be monitored or revealed by a subpoena to the hosting company if there's no hosting company. You can be sure that Google complies with subpoenas and court orders unless they're laughably vague and potentially useful for a PR stunt.

I work at a 10K+ employee company which is moving over to gMail, gCalendar, gTalk and gDocs.

gMail and gCal are a potent combination.

They came from Exchange but migrated everything to Google Apps.

I think that migration's case it's online. I've readed about it.

Gmail came out of the system they were already using internally.