I explained earlier our rationale for why we compete with Google. From our forums today, here is a request for Google Apps integration with Zoho:

… I would like to have an app which will sync docs, spreadsheets, etc. with Google Apps and/or other providers. It will help convince users that they can move their data to the cloud and have a peace of mind …

Here is another request on GMail integration with Zoho CRM:

I will sound like an heresy to suggest. but we have become hooked on Gmail.

Salesforce and Gmail willl very shortly work together.

Is there a remote chance that Zoho and Gmail will work together ? of course the decision is more strategic in nature for Zoho than purely technical.

I wish that this post gets addressed from the Zoho developer team.

Let me state this very clearly: our goal is to fully support Google Apps across Zoho, so we do not consider these requests unreasonable at all. We are working very hard at these kinds of integration. Why haven’t we done it already? I will put it down to the practical reality of software project management. Integration projects are inherently complex, and integration of any two products (even if they are from within Zoho!) is quite involved. A lot of scenarios need to be tested, and that just takes time. We have already embraced Google Gears for offline support and provide sign-in support for Google/Yahoo users. We are working on a lot more of these types of integrations, but it just takes time, so please bear with us.

Our commitment to support the Google suite is not merely tactical. We fully recognize that we live in a Google era, as I outlined in my post IBM, Microsoft and Google Eras of Computing. We believe the best opportunity for Zoho is to align ourselves with the dominant platform, which is now Google, and innovate on the applications. That is how we best serve our customers, and that is how we ensure our own long term prosperity.

By embracing the Google suite, do we risk getting marginalized? If we fail to innovate and provide extra value to customers, we will be marginalized regardless of whether we support the Google suite or not. That explains in a nutshell why we choose to cooperate with Google. It is a huge win for customers, and it keeps us focused on what we need to do to provide extra value.

I have always believed sports analogies get taken too far in business. Google Apps doesn’t have to lose if we have to win. That summarizes our philosophy and world-view.

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My last post on why we compete with Google attracted a bit of attention, and quite a few questions. Ignoring the questions on my IQ or my competence in English (isn’t the internet great?), let me come to the most central one of all: if business software is so much less lucrative than consumer internet offerings, why does Zoho want to be in it? To rephrase it, if the argument is that it won’t prove to be lucrative enough for Google, why does Zoho want to do it?

The pat answer, of course, is “Zoho is not Google”. The long answer is “AdventNet is not Google”, and what that means is you should understand our history. In a nutshell, for AdventNet, this market means moving up in the value chain, while for Google, it represents going down that value chain. Here are a couple of quick examples to illustrate this process: why does McDonalds want to compete with Starbucks while Starbucks clearly isn’t going to enter the fast food business? Why does Wal-mart want to offer organic foods, while Whole Foods is never going to offer clothing or toys? Coffee has better margins than hamburgers, organic food has better margins than clothing.

AdventNet, the parent of Zoho, is an unusual company: we have never ever raised any outside investment in our 12+ years in business, and we still remain private. We are over 850 employees now, and the company has multiple divisions, Zoho being the most recent and the most glamorous. But we haven’t forgotten our roots. We are still the leaders in the market we started to serve 12 years ago. That is the business of selling software to network equipment vendors (the so-called OEMs). It has been a good business for us, but it is also a famously low margin business. We cut our teeth in that tough business.

So why would we enter a low margin business? Leaving aside the IQ question of the CEO, a low margin business let us get a toehold with relatively little marketing/sales/branding investment, relying purely on our engineering skills.

By 2004, we had gained sufficient scale to enter the next higher level in the food chain, with our ManageEngine suite of products, sold directly to business customers. It offered us the opportunity add more value than we could in the OEM business, but it also required higher investment in marketing and branding. We have been quite successful in that business.

In 2005/2006, we took the next step, with Zoho. Clearly, Zoho addresses a far bigger market than what our OEM or ManageEngine product lines address. To address that larger market, much larger investment in infrastructure, marketing and branding would be required. Fortunately, AdventNet is at a size now to be able to afford that investment. Of course, Zoho also offers us more opportunity to differentiate our offerings, which is the key to creating higher value.

None of this is particularly original. Most bootstrapped companies go through these phases. Microsoft started as an OEM software company. Oracle was originally a consulting company. 37Signals started out as a design consulting company, before evolving to be a strong player in software-as-a-service. Atlassian started out offering issue tracking software, before branching out into Wikis and enterprise collaboration, which is a much higher margin product. Let’s not forget that Google got its start OEMing its search engine to AOL and Yahoo - a much lower margin business than the one it is currently in.

The reason this model looks odd to most people is the relative rarity of bootstrapped companies in recent times. The venture capital model enables companies to leapfrog these evolutionary stages, directly going higher in the food chain, in their quest for rapid value creation. That comes at a price, which we have not been willing to pay at AdventNet - more on that topic later.

So to answer the question on Google vs Zoho: the business software market makes perfect sense for us, as a move up the value chain. I am not sure it makes all that much sense for Google.

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How do you plan to compete with Google or why do you compete with Google? That is a question we get asked very often. It is better to ask why Google is interested in the business software market. Let me explain with a spreadsheet.

Focus on the revenue per employee and profit per employee metrics. I have grouped together the business software industry and the consumer internet industry separately. Notice how very successful companies with mature business models like Oracle or Intuit don’t even pull down half the revenue per employee of Google, and perhaps surprisingly, they pale in comparison with the supposedly struggling Yahoo. Ebay also towers over every software company except Microsoft. Finally, even Microsoft falls short of Google’s revenue/profit per employee metrics - and Google isn’t even milking a mature monopoly.

Salesforce.com is very instructive. Though it likes to pass itself off as an internet giant, its revenue per employee is only in the range of its business software peers, and is a fraction of the real internet giants - I know an internet giant when I see one, and you ain’t no internet giant, Salesforce ! This, I must add, despite their out-of-this-world pricing for their CRM subscriptions. They pull in almost $1 billion in revenue on the backs of - those are some really overloaded backs - a little over 1 million users, leading to almost $1000/user/year.

Now it is clear why we compete with Google. Google is perhaps the most stunning technology success story ever, but we simply don’t believe Google has the rational business incentive to get too deep into the business/IT software category. The lower revenue and profit per employee figures would be tolerable if there were huge growth opportunities there, but when very successful companies like Adobe and Intuit pull in revenues well shy of a Yahoo, when even the enterprise software leader SAP is smaller, and slower growing than Google (Google makes nearly as much in profit per employee as SAP or Oracle Salesforce make in revenue per employee), it is fairly clear this market is not going to make a material contribution to Google’s growth and profitability objectives. So what is Google’s plan here? It is fairly obvious they are in it to put Microsoft on the defensive on its home turf, so that Microsoft’s offensive capability in the internet is diminished. It is also perfectly clear why Microsoft wants to be an internet player - as Google has shown, it is a higher margin business even than its monopoly-profit core business.

So why is business software so much less profitable than the internet? I can think of two reasons: a) purchasing departments that know a thing or two about supplier margins and specialize in putting the squeeze b) sales and support costs, particularly support costs. When you sell software to businesses, they have all kinds of support expectations, which adds to headcount. A search engine or a news portal isn’t expected provide any customer support.

Another conclusion that leaps out is that within business software, companies that sell to small and mid-sized businesses, such as Adobe & Intuit (Microsoft is also very strong in SMBs), have higher revenue per employee than companies that focus on large enterprises, such as Oracle or SAP. This is likely due to SMB-focused channel strategies leading to “outsourced” selling.

When push comes to shove - and there is a lot of very messy push and shove in the business software market -  Google’s resources are going to flow into figuring out how to monetize the humongous traffic of YouTube or compete in online auctions, rather than figure out a way to squeeze a bit more margin compared to Oracle or Adobe or Salesforce. That may explain why Google has been silent on CRM, Project Management, Invoicing or HR type of tools, because those markets don’t offer the profit potential they already enjoy.

(Update: Dan Farber’s take here)

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Knowing what we do with our own alternative to college in India, multiple people sent me this op-ed at the WSJ by Charles Murray  For Most People College is a Waste of Time, asking for my opinion. Before I proceed, let me first state one thing clearly: the problems I have with Indian college education, which inspired our alternative, are of a different nature than the problems (I do have some!) I have with American college education. I have experience with both, and I believe the issues are fundamentally different.

Charles Murray mainly attacks the traditional (if that is the right word here) liberal arts component of American college experience:

Outside a handful of majors — engineering and some of the sciences — a bachelor’s degree tells an employer nothing except that the applicant has a certain amount of intellectual ability and perseverance. Even a degree in a vocational major like business administration can mean anything from a solid base of knowledge to four years of barely remembered gut courses.

In my experience, American undergraduate engineering education is very, very good, but you have to know where to find it. A “middling” or even a “low” school is better for most students because the faculty is more focused on teaching vs a “prestige” school, where the faculty is purchasing that prestige through research (more on that later) so teaching is a chore for them. The humble community colleges offer the most bang for the buck (literally) in most basic math/science/engineering courses - and indeed, that has been our role model in our own internal initiative. If you are short of money, this is the path I would recommend: take all the basic math/science/engineering classes in your local community college, and then transfer credits to a middling state school for more advanced ones. You can get a fine engineering education for very little money this way.

On the subject of research, let me state it very plainly: most research in engineering, even in prestige schools, is bunk (note: I didn’t say “all”, I said “most”, there are rare exceptions). Academia at that level is a tenure-chasing paper production game. You master the art of packaging trivia in impressive sounding language. In hard sciences and engineering, the language that truly establishes your superiority over the rest of humanity is mathematics, so you end up writing highly  unreadable - I doubt even dissertation committees truly read that stuff - mathematical garbage. I had seen it when I was doing my PhD in the early 1990s (I was well connected, with tons of friends from India across a broad range of schools) and most recently I see it clearly in programming language research in Computer Science, which I have attempted to follow.

On liberal arts American education, I fully agree with Murray. Let me give a bit of background to this. When I was an engineering undergraduate in India, I found myself utterly bored and miserable with the education that was on offer. There was a period I did nothing but read, read and read. George Orwell, in particular, was my favorite (I was recently reminded of it at Hacker News, and ended up re-reading Nineteen Eighty Four) - I read every one of his works. I was also well schooled by Bertrand Russell, attempted to but failed with Karl Marx, and found inspiration with Ayn Rand. None of it had anything to do with my “official” education in Electrical Engineering - let me just say that I sacrificed Maxwell for Orwell -  but by then, I had decided I was going to do it on my own.

So why is that relevant here? Orwell’s Politics and the English Language proved even more educational than I realized, when I came to America, with liberal arts faculty providing the perfect, if unwitting, illustration - here is a link on deconstruction for you.

Returning to engineering, there is a fundamentally different reason I believe alternatives to college education are needed, and that has to do with contextual knowledge and the ability to hold the interest of students. Think about a subject like programming languages. A typical “good” Computer Science program (assume a really good teacher) gives you a very good grounding in parsing, compilers and such. The issue I have is the psychology of most students. No matter how well this subject matter is taught, it is going to be boring for most, because the context is all wrong for them to pay attention. There is no shared purpose in that classroom context: when it comes right down to it, the typical student is focused on getting through with the torture and getting a decent grade, so he or she can get on with their lives.

More on the subject of contextual knowledge later.

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I was recently interviewed on Fox Business News. The anchor Liz Claman told me one of the things that interested them about Zoho/AdventNet is our recruitment model. It is a subject I am passionate about -in fact, I spend about as much time on it as our products or technology. After all, AdventNet has about 700 people, and we are hiring at a steadily increasing pace, so recruitment, motivation and retention are important topics for us.

I was talking to a partner at a successful venture capital firm a few weeks ago (no we are not raising money!), and the subject turned to recruitment. I told him we don’t really value fancy degrees and famous schools. He was surprised - perhaps because of my own educational background. I asked him “Consider all the partners in your own firm and similar firms like yours, how many of them come from fairly unremarkable academic backgrounds?” I stressed that my argument was not that every partner comes from unremarkable background, but enough of them do, making academic background a poor way to screen for partners in venture capital. In fact, the reality of venture capital, as with any demanding field of human activity, is that most of what you learn you learn by doing. As the management philosopher Peter Drucker has observed, “Our most important education system is in the employees’ own organization.” Paul Graham has made similar observations about the academic backgrounds of founders of Y Combinator start-ups - in fact, Paul makes a stronger point that people coming from humbler schools seem to try harder to succeed.

The trouble has been that while most people understand, even readily accept that observation, they have trouble formalizing it, and more importantly, acting on it. In our own case, this observation dawned us slowly over the years - one of the benefits of being in business for a long time is you have the time to learn obvious things slowly.

Our company in India always faced trouble recruiting, because most college graduates, particularly from well-known colleges, would prefer big-brand-name firms. Simply out of sheer necessity, we started to disregard the kind of college a person graduated from, and the grades they obtained. In India, that task was made even easier, because much of the Indian industry is boringly conventional, and job advertisements that specify things like “Must have a minimum of 80% average in college” are fairly common (so if you got only 79%, don’t bother to apply). As a result, we get a lot of the arbitrarily-cut-off category applicants. What we found over time was that there is a lot of really good talent in that pool, which the industry had overlooked. Based on a few years of observation, we noticed that there was little or no correlation between academic performance, as measured by grades & the type of college a person attended, and their real on-the-job performance. That was a genuine surprise, particularly for me, as I grew up thinking grades really mattered.

Over time, that led us to be bolder in our search for talent. We started to ask “What if the college degree itself is not really that useful? What if we took kids after high school, train them ourselves?” I talked to a lot of people internally, and one of our product managers introduced me to his uncle, a college professor, who he thought might be interested in hearing me out. As I shared our observations on recruiting, he shared his own experience in over twenty years teaching Mathematics and later Computer Science. It turned out we shared a common passion. He joined us within a month to start our “AdventNet University” as we very imaginatively called it. This was in 2005. He went to schools around Chennai to recruit students. So as not to distract anyone from their existing plans, we waited till the school year ended, went to several schools to ask for bright students who were definitely not going to college for whatever reason (usually economic). We then called on those students and their parents, and explained our plan. We started with an initial batch of six students in 2005, who were in the age range 17 or 18.

That proved to be an outstanding success. Within 2 years, those students would become full time employees, their work performance indistinguishable from their college-educated peers. We have since expanded the program, with the latest batch of students consisting of about 20, recruited not just from Chennai but smaller towns and villages in the region.

One question that comes up often: if you don’t look at formal credentials, what do you actually look at? This is a surprisingly difficult question. In fact, doing full justice to it would take me a series of posts, and take me into some deeply philosophical territory, which I will attempt some other time. At one level, the answer is very simple (”go by gut feel, i.e use your human gift of judgment” - yeah, I know, what a cop-out), but at another, it is exceedingly hard. The difficulty comes from the simple observation: any formal rule-based system involving human beings is very easy to game and will be gamed. More on that later.

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By now it is conventional wisdom to say that there was an IBM Era of computing, then a Microsoft Era, and now we are in the Google Era. In this post, I will explain why Microsoft was not the “next IBM” and why Google is not the “next Microsoft” - there are significant qualitative differences among them, quite apart from their status as the dominant, era-defining players. Understanding that qualitative difference is crucial for third party vendors  like Zoho to thrive.  I was reminded of this because of the IBM/Google partnership unveiled today (via Dan Farber & see also Nick Carr). As an aside, I have coined a kind of Moore’s Law on these computing eras:

The dominant technology company in a generation reaches its pinnacle at about half the size of the dominant company in the previous generation, and it retains its dominance for half as long.

The original IBM mainframe era (in contrast to today’s IBM) was one of highly closed systems. IBM was not just the dominant player of the era, IBM was pretty much the entire ecosystem. There just wasn’t a lot of room for third parties to play in. Third parties were marginalized companies surviving on IBM’s sufferance or professional services companies (like EDS) or were providers of cheap replacement parts, which felt vaguely dirty, borderline legal (consider today’s third party print cartridge situation as an analogy). 

In contrast to IBM, Microsoft was far more open, which indeed was the original reason for their success. Microsoft unleashed what I would call the semi-open era of computing. The acronym ISV (independent software vendor) came into its own during the Microsoft era. Indeed, Microsoft encouraged ISVs, provided fairly good support - up to a point. The defining test for Microsoft was Netscape, the most prominent ISV that got on the wrong side of Microsoft. Microsoft failed the test by winning; their victory over Netscape forever established their reputation in the industry, a reputation that finds its echo in Yahoo’s cultural resistance to being assimilated. Indeed Nick Carr alludes to that defining Netscape moment in his title “Is Office the New Netscape?”

Now the present Google era. Google has the genetic and cultural advantage of being born in an open source world, with a business model that is aligned with rather than antagonistic to open source. It reflects in how they conduct their ecosystem initiatives. Google Gears comes with one of the most liberal open source licenses (BSD license),   and we at Zoho particularly appreciate the support provided Google’s open source teams. In our extensive interaction with them, we could tell how they truly get the value of openness. That openness is going to be the underpinning of the Google era of computing - I hope they never forget that!

OK, that brings me to our own position as an independent vendor. At Zoho, we fully embrace the fact that we play in a Google world. We also fully recognize that opportunities for independent ecosystem players expanded massively during the Microsoft semi-open era compared to what existed in the IBM era, and they will expand even more significantly in the Google open era. Our goal at Zoho is to be an innovative, vibrant, profitable player in this new era. As much as Microsoft utterly dominated computing, vendors such as Adobe and Intuit built thriving businesses (still thriving!). Even more opportunities of that kind exist for independent ecosystem players in the Google era.

That qualitative difference between IBM, Microsoft & Google (seen during their respective pinnacles) is why we see a huge opportunity at Zoho. Our competition with Google is only a part, an important part to be sure, of what defines us. Cooperation with Google, embracing their open standards, is going to be just as important for our success.

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Randall Kennedy of ZDNet makes a bold prediction that streaming office will kill cloud based alternatives like Google Apps and Zoho. CenterNetworks has a somewhat different take. Let me first explain what is meant by streaming office: the server splits the code of an existing desktop application like MS Office into chunks, streams the code to the client as needed,  which the client executes in a virtual machine layer. I would call it an “appletized application” (though there is no Java involved in this).

So is that model going to finish off web application suites like Zoho? Call me hopelessly biased or hopelessly delusional but I vehemently disagree (surprise!).  Let me list some reasons.

1. One-time loading isn’t 

Proponents of such systems always say “it is only a one time download”. Yes, it is a one time download, but for each PC you use, and often each browser you use as well.  Combine that with browser version upgrades, VM upgrades & application upgrades, and you are going to be loading the application code much more often than is comfortable. Such upgrades have a way of happening just when you want to get in/out quick to get something done. Experience with Java applets and Java webstart has shown that this is true.

With HTML/JS apps, we actually assume that code will be downloaded practically every time, and architect it to work fast in that case. We measure code in kilobytes.

2. Light footprint of web apps doesn’t preclude rich functionality 

Kennedy makes the point that only streaming office could deliver full office functionality:

Full Office Functionality - MAV encapsulates the entire sequenced application. This isn’t some “web-based” Office knock-off. It’s the real deal: Microsoft Office in all it’s sophisticated, class-leading, standard setting (flaunting?), enterprise desktop-dominating glory.

Mike Gunderloy of WebWorkerDaily observed how rapidly online suites are evolving. I have argued that online application suites are well on their way to matching and exceeding the functionality of desktop applications. Our recent support for VB macros in Zoho Sheet is an example of the rapidly evolving functionality. By the way, we run the macro securely in the server, the best place to execute such code. Due to intelligent partitioning of the application, online suites are going to retain their ease of use and lightness advantages, while advancing in terms of features.

3.  Streaming Office assumes a Fat Client PC

I am typing this post in a fairly low-end machine, which can run Firefox well, but cannot do much else (I call it a Firebox). In fact, I often use fairly old PCs with Firefox to torture-test Zoho and loudly complain to our developers to fix this or that. My personal best on that score is a Windows 98 PC (amazingly it runs Firefox well!) we have lying around here, and yes Zoho suite runs acceptably on that machine. I have cheap friends who still have Windows 2000 PCs at home (which again runs Firefox well!) and use it as their browsing machine. Good luck running streaming office on any of these machines. This is not a trivial issue. The web computing model has given a new lease on life for old machines, and people aren’t going to upgrade their hardware just to run streaming office. The reception for Windows Vista, which essentially requires the purchase of a new PC, shows that this problem is real.

Let me make a bold prediction of my own: streaming office will fail. Note that I am not talking about MS office per se here - I am suggesting that the streaming incarnation of it will fail. Web suites, including Zoho, will succeed in carving out serious market share. Within that space, our own goal is sustainable, profitable market share, that keeps us vibrant and innovative. With our breadth and depth of applications, we are well on our way.

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Mike Gunderloy at WebWorkerDaily has a great post on continuous innovation in online office suites. Both Google & Zoho are moving at a rapid clip. The root cause of this faster pace of innovation? Software development productivity.

We have experience in both the traditional and cloud model of software delivery, so can say with confidence that the cloud computing model enables a quantum leap in software development productivity. Such productivity gains for producers translates into faster innovation and better quality. And as I argued in my previous post, the reduced friction of lower switching costs in the cloud computing model will work to reduce prices as well.

Projecting this productivity advantage forward, I am confident in predicting that within a year or two, online suites will overtake desktop software in terms of features and functions. It won’t just be the Zoho or Google suites that would get there, perhaps even new companies that are as yet unknown (I am assuming Microsoft already has its cloud service coming out!). Conventional wisdom holds that online suites will forever be a lightweight alternative, but I believe that will be turned on its head.

Where do these productivity gains come from? I will address that in a separate post - there are numerous disparate sources that aggregate into a vast gain.

This is great news for consumers, even for the ones that don’t switch to the cloud, simply because of the pricing pressure it will bring. Like the open source competition which preceded and even enabled the cloud computing revolution, this competitive dynamic is fundamentally different from the one that Microsoft has faced before.

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Amazon is the most important software company in the world that does not think like a traditional software company, particularly of the “enterprise” or “business” software variety. I am talking about the Amazon Web Services platform. In any rational business, as scale goes up, per-unit costs go down. Competitive market dynamics ensure that prices go down. Sure enough, Amazon recently lowered prices of their services, as they gain scale, and lower their cost of operations. Compare that with what has happened in the business/enterprise software market.

In 1995, when I bought my first personal computer (a whopping 16 MB of RAM!) in San Diego, it cost me almost $3,000 and that was from a local white-box assembler who specialized in cheap. Windows 95 added about $50 to the cost. Microsoft Office came in around $250. Fast forward 13 years, and a perfectly serviceable PC can be had for $300-400. Vista probably will set me back about $80 assuming OEM pricing by the PC vendor. Microsoft Office will cost more than the PC itself, if I am a business user. Even a “generously” discounted student edition is about $120. As hardware costs plummet, software prices have actually gone up, so outfitting a PC with software now costs more than the hardware cost of the PC itself.

Contrary to what software sales and marketing types would have you believe, there is nothing rational about any of this. Throw away arguments like “Software is getting more complex, cost of development only goes up” and so on, because all of those things are true for hardware as well - a semiconductor chip is really hardwired-software. It is all too easy to blame sticky prices on “monopoly taxes” and while I believe there is some truth to the monopoly argument, there is something more fundamental going on. After all, Oracle is in a fairly competitive market, and still no one even expects Oracle to ever drop prices - perish the thought, that never happens. The clearest evidence of such an ingrained expectation is that no Internet company today would even consider Oracle for its database needs. On the flip side, Internet Explorer got itself into a near monopoly after the demise of Netscape, and yet, Firefox has stormed its way up to 20% market-share and climbing.

So the real explanation is elsewhere, and the Firefox example is illuminating: it is the friction of switching costs that keeps prices high. Switching from IE to Firefox is fairly easy - in fact, just last week, at the Web 2.0 Expo trade show floor, we discovered that the demo machines we had rented came only with IE, and the first thing we did was to download and install Firefox. That was almost an instinctive act, done without even much thinking. And a perfect illustration of almost zero switching costs.

That is also why cloud computing is so important to business and enterprise customers, even for those that don’t use cloud services. Switching from one web service to another is nowhere as complex as switching your operating system or even your desktop software. In any event, the vendor does most of the work. As one illustration, we frequently migrate Salesforce cusotmers to Zoho CRM, and the process is nearly fully automated, with human intervention mostly confined to perform quality assurance checks to ensure there are no glitches for the customer. As cloud services compete in a relatively low-friction market place and therefore prices fall along with unit costs, it is going to drive prices down even for conventional software.

Amazon is a perfect illustration of it. A lot of the code behind Zoho services was written before Amazon web services came on the scene, yet we have found that it is fairly easy to run our applications on the Amazon infrastructure - it took just a few days to test this out.

Lowered switching costs is going to dramatically alter the dynamics of the software industry. For all too long, vendors have hidden huge inefficiencies in their business model under the comforting cushion of high switching costs for customers. Not anymore. Watch for falling software prices ahead!

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This is another question we get, particularly from business-oriented users. My policy always is to tell the truth, and no marketing BS, please. Does Zoho do everything that MS Office does? No. It does not yet, and it will take a while to reach feature parity. While it can handle the majority of documents from the MS Office world, it cannot handle everything. It cannot as yet handle complex spreadsheets. It cannot do transitions and effects in Zoho Show. These are the kinds of things our engineering is working on. It is our goal to offer reasonable feature parity, but I will be the first to acknowledge that we have some ways to go. There are no fundamental technological limits here - it is simply sweat and blood and toil (& time!) needed to get there. That self-awareness of our limitations is also why we don’t charge business users yet, instead preferring to encourage them to use Zoho free in the meantime.

Does that mean Zoho is pointless now, until we overcome all those limitations, until it becomes full featured? If it were a desktop suite, yes, it would be kind of pointless to offer a less-than-full-featured experience - the only reason to use it would be the price, which is not a sufficient reason for most people. But in an online application, there is sufficient additional value in a completely different dimension to make it quite useful in many different contexts. I am typing this blog post in Zoho Writer, sitting in a friend’s office. My aging laptop is finally quitting on me, so I borrowed one of his spare old PCs (it runs Windows ME, but Firefox works so well on it that I am typing this post in Zoho Writer!). This anytime, anywhere access to data and apps is one key benefit; easy collaboration is another benefit. Finally, in a pinch, an old PC can serve just as well as a point of access for web apps like Zoho. Granted, all of these don’t substitute for features, but they do make the experience worthwhile, as so many users have found out.

Offering value in a different dimension is not particularly unique to online vs desktop app debate. An MP3 player doesn’t play music to the same fidelity as a full fledged home entertainment system. Yet, the mobility that comes with an MP3 player more than compensates for the slight reduction in sound quality. A cell-phone integrated camera is not as good as a stand-alone camera. But I never owned a real camera, because I wasn’t much of a photographer, so I knew I would never carry around a camera; a cell-phone camera actually makes me take an occasional photo. YouTube video clips don’t replace the TV viewing experience - they add value in a completely different dimension.

And Zoho is very much work in progress. We are working hard on features, functions and user experience - as an example, Zoho Writer and Zoho Creator are slated for some key updates over the next few days. Therein lies another key benefit of the web service model: you inherit those features with no effort at all.

We have come a long way in the last 2 years, but we recognize we still have a long way to go. One thing we assure our users: Zoho will keep getting better!

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