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Zoho slows frantic growth, works on integrating Web apps instead

But it still offers the broadest Web productivity suite

By Eric Lai
February 4, 2010 01:37 PM ET

Computerworld - Nearly four years after its launch, Google Docs still consists of just three components: word processor, spreadsheet and presentation maker. This "less is more" approach, while natural for a resource-challenged start-up, remains puzzling coming from a $22 billion-a-year giant ostensibly committed to beating Microsoft Office.

Instead, it's been the little guy, Zoho Corp., that has built the broadest Web productivity suite out there. Today, it offers 20 office and business apps (21 if you include e-mail). These range from the basic word processor and spreadsheet to specialized HR and business intelligence apps, to its most profitable offering, a CRM app that has more than 10,000 paying users, said Chief Evangelist Raju Vegesna.

"Believe it or not, we were competing with 17 online word processor apps when we launched in 2005," Vegesna said. "And when Google launched Google Docs [a year later], we thought we'd get crushed."

By driving its now-350-strong Indian development team hard, Zoho has thrived, while others, like ThinkFree, have faded.

Not only does Zoho have more than 2 million paying and nonpaying users, its revenue has been growing at a rate of 40% per year and it expects to hit profitability by year's end, Vegesna said. (A New York Times story that said Zoho had $50 million in revenue last year failed to note that that total was for Zoho's parent company, which operates two unrelated divisions, Vegesna explained.)

"Google Docs validated the market," he said. "It is the best thing that happened to Zoho."

Vegesna is confident that Microsoft Corp.'s coming Office 2010 as well as its belated online entry, Office Web, will also prove to be boons for Zoho. And he's unworried about the potential creation of Oracle Cloud Office, saying he doesn't expect it to arrive "for four or five years."

He also said Zoho has slowed its breakneck rate of development to the relatively relaxed pace of about three new apps per year. Rather than a sign that it is easing up on the gas pedal, Vegesna said it's a shift in strategy to polish up its existing apps and knit them together better.

Recent improvements, he said, include letting users open an attachment with Zoho Writer inside the Mail app and attaching files stored in their Google Docs database. Others include letting users quickly edit sales leads stored in the form-based CRM database in the more powerful Zoho Spreadsheet, and letting users sign in via their Google, Yahoo and Facebook accounts.

The goal is to reduce friction and let its users, mostly workers at smaller, distributed companies, move around the various Zoho Apps as quickly and painlessly as possible, Vegesna said.

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