Trucking firm Ryder System Inc. is one of ThinkFree Inc.'s best customers. It is also a maddening example of the obstacles that ThinkFree and its pioneering founder and CEO, T.J. Kang, face trying to convince CIOs that its online office software is ready for big business.
When Miami-based Ryder -- which had $6.3 billion in revenue in 2006 -- decided two years ago to finally convert hundreds of green-screen terminals at its truck leasing depots over to full, Web-enabled PCs, the company was naturally loath to splash out $300 each for what would likely be lightly used copies of Microsoft Office.
"These are repair technicians and shop managers and rental clerks," said Ryder's director of technical services, Henry Wengier. "Usage of Office is not high with them."
At the same time, Wengier was getting enough requests from employees needing to create an occasional memo or spreadsheet that he knew a solution was needed.
Wengier found it in ThinkFree. For just $6,000 a year (200 concurrent user licenses of ThinkFree's server edition at $30 each per year), Ryder is able to provide access to productivity software to 7,000 workers in 700 U.S. locations.
Because employees were already familiar with using network-based applications, no extra training for ThinkFree was needed.
"We just sent out a notice, 'Here is software that looks and acts like Microsoft Office; here's how and what you do,'" Wengier said.
Wengier loves ThinkFree so much that he even uses it on his home computer. At the same time, he has no plans to extend ThinkFree to any of Ryder's 10,000 white-collar office workers.
Although Wengier estimates that 90% of the office workers "could get by using ThinkFree, because there is so much functionality that people are not utilizing," identifying exactly who those workers are wouldn't be easy.
"There's a certain group of people ThinkFree is great for," he said. But "some people in accounting live in Excel. If we tried to give them ThinkFree, it would be a major problem."
Early to the collaborative-docs party
When Kang first began developing ThinkFree almost a decade ago as an application for the long-gone company Network Computer, ThinkFree was "the lone voice in the wilderness."
"Now, we don't have to convince people that this is the wave of the future," said the Korean-born, Canadian-educated entrepreneur in an interview in San Diego earlier this spring.
ThinkFree, which offers an online word processor, spreadsheet and presentation creator, is now just one of many vendors in the Office 2.0 space. It does remain one of the more highly touted ones, among companies in an elite group that includes Google Docs, Zoho Office and a few others.
Proponents say Office 2.0 applications are disruptive because of their low price points and powerful collaboration features.
Take Sean Kearney, a national director of training and performance management at Time Warner Cable. Kearney began using ThinkFree last year after getting fed up e-mailing attachments back and forth with other remote colleagues.
"Having multiple people editing the same version of a document and then merging all of them together was a nightmare," Kearney said.
ThinkFree solved that complexity by storing a master document on its server that users could check out via the Web, even at the same time. ThinkFree synchronized all updates and changes, while keeping prior versions so that users can easily go back.
"The way ThinkFree handled version control made things a lot easier," Kearney said.
Kang also claims ThinkFree is better at opening and saving Office files (up to the 2003 version) than open-source desktop competitors such as OpenOffice.org are. It is working on compatibility with Office 2007, too.
For that, the service, relaunched in late 2005, has garnered glowing reviews and even rumors of buyout interest from its biggest competitor, Google.
At the same time, ThinkFree has barely made a dent in Microsoft Office's dominance. While Microsoft claims more than 400 million worldwide users for Office, ThinkFree claims just 300,000 users of its online version, which is free. (ThinkFree has sold hundreds of thousands of copies of desktop and portable -- think USB thumb drives or iPods -- versions of its office suite.)
And Kang says the San Jose company is profitable, mostly due to lucrative licensing agreements with leading Korean and Japanese Web portals that each boast tens of millions of users.
Where ThinkFree's record is abysmal is with enterprise CIOs and IT managers. Its server edition has only 20 customers, each with an average of 100 users.
Most are cost-conscious nonprofit organizations such as the Los Angeles Public Library, which began switching to ThinkFree at the beginning of this year.
For its public access computers, the library long delivered Microsoft Office through the network using Citrix software and eight servers, according to James VanGerpen, senior systems analyst at the library.
"We had only 300 licenses but over 2,200 public access computers," he said. "Patrons frequently were unable to access the servers, which were overwhelmed by the demand."
Not only does using ThinkFree cut down the number of servers needed from eight to one, the library can now deliver ThinkFree to all 2,200 PCs at the same time, VanGerpen said. It is also cheaper.
The rollout is now half done and should be completed by the end of the year. "To date, there have been very few difficulties," he said.
Lost in (the enterprise) space
Despite having marketed ThinkFree Server at big corporations for more than a year and a half, Kang admits, "I still don't really know that space very well."
Instead, Kang has focused ThinkFree on trying to win tech-savvy consumers and small to medium-size businesses.
Earlier this month, ThinkFree boosted its real-time collaboration capabilities when it announced an agreement with Hong Kong-based EditGrid. EditGrid, which lets multiple users simultaneously edit a single spreadsheet, will replace ThinkFree's existing spreadsheet software.
In early May, ThinkFree also introduced a public repository where users can share their ThinkFree-created documents for free viewing or use by others, or store them for embedding on their blogs or MySpace pages.
Kang hopes community features, such as the ability for readers to rate documents and their creators, will help turn ThinkFree Docs into a thriving community ala Flickr or YouTube.
The repository has grown quickly. After a month, there were 850,000 documents on the site, with another 30,000 being uploaded each week, according to a ThinkFree spokesman.
ThinkFree is also beta-testing a subscription version of its online service targeted at SMBs. Built using Java, ThinkFree Premium will cost $7 to $8 per month when launched later this summer and grant users unlimited storage space they are limited to 1GB in the free version and the ability to use ThinkFree while not connected to the Internet.
The latter feature, all the rage among Office 2.0 vendors today, was not hard to add because ThinkFree was originally conceived of as a hybrid on- and offline application.
What it takes
For ThinkFree to be a raging success, Kang says the company needs to grab only a tiny slice of the office market from Microsoft.
"Microsoft made $12 billion from Office alone last year. It is Microsoft's single most profitable product. I don't think it will go away anytime soon," Kang said. "On the other hand, I really believe that two years from now, consumers and small to medium-sized businesses won't see why they should continue to pay $300 for office software."
Kang's goals may sound modest, but they may be tougher to realize than he thinks.
For one, the low-hanging fruit of tech-savvy, cost-conscious SMBs may quickly be plucked, to be replaced by SMBs that have neither heard of ThinkFree nor have much interest in switching -- no matter how much they pay for Microsoft Office.
According to a study released late last month by New York-based market research firm AMI Partners, almost 40% of small businesses in the U.S. said they had not heard of online office software such as ThinkFree or Google Docs.
"Most SMBs, whether they are a law office or a beauty salon, are too busy putting their nose to the grindstone," said Laurie McCabe, the AMI analyst who led the survey. "Their motivation to seek an alternative to Office is quite low."
To raise awareness among SMBs currently loyal to Microsoft Office, McCabe suggested that ThinkFree get creative about its marketing. For instance, it could sell start-up CDs at retail stores that grant users several months access to ThinkFree Premium. Or it could do a co-marketing arrangement with vendors such as Cisco Systems Inc.'s Linksys division, which would be interested in promoting network-based applications.
McCabe says ThinkFree's strong compatibility with Microsoft Office is a major plus with SMBs.
"In that one dimension, it is well positioned," she said. "But in terms of awareness, it faces a huge hurdle compared to Google Docs."
Kang says he is not worried.
"We try to go deeper with the Microsoft compatibility" than Google, he said. "Google doesn't own this space the same way Microsoft owns the desktop space."
Even if Google Docs ends up grabbing the lion's share of enterprise deals from ThinkFree, Google's legitimization of the Office 2.0 space will likely still benefit ThinkFree.
"A rising tide lifts all boats," McCabe said.