Office 2.0 vendors want to exploit Microsoft Office, not overthrow it

Dreams of revolution give way to pragmatic hope of coexistence

Microsoft Corp.’s mantra that "software and a service" -- not software as a service (SaaS) -- is the future of the industry has long been scorned by Web 2.0 start-ups or characterized as predictably self-serving talk from a market leader feeling the heat from credible challengers such as Google Office and ThinkFree Office. But at a leading Silicon Valley conference on Friday, many in this latest crop of promising Office 2.0 start-ups sang a different, less revolutionary tune.

Rather than attacking Microsoft Office as in past years, executives speaking at Dealmaker Media’s Under The Radar: Why Office 2.0 Matters conference talked up how their hybrid services could function both as hosted Internet services and, when users lack connectivity, as desktop applications.

Executives such as Vlad Voskresensky, CEO of San Mateo, Calif.-based InvisibleCRM, also proclaimed their eagerness to work within the massive existing ecosystems built by Microsoft rather than attempt to displace them.

"Our goal is not to pioneer something all-new," he said. "Our time is more valuable than that."

Voskresensky wasn't shy about criticizing what he considers the clunkiness of today’s big packaged enterprise software. But rather than creating replacements for applications such as Documentum, Amdocs or Salesforce.com, InvisibleCRM is creating back-end connectors so that users can access data living in those applications from within Microsoft Outlook.

Voskresensky said he keeps in regular contact with Microsoft Office developers and their plans for the upcoming Office 14 in order to help him plan InvisibleCRM’s road map. That pragmatic approach has helped the two-year-old start-up win some enterprise clients, including wireless provider T-Mobile’s German division, which just signed up 300 of its employees to use InvisibleCRM.

"Why should we fight with Microsoft when we can meld [the systems] and multiply the value to customers?" he said.

Living in the real world

Ironically, or perhaps, symbolically, the Office 2.0 conference was held on Microsoft’s campus in Silicon Valley, just a few months after the release of Office 2007.

Another CEO, Jeffrey Walker of Atlassian Software Systems Pty., who has presented at previous Under The Radar shows, proudly counts his firm as part of the Web 2.0 generation. Yet, the vast majority of the Sydney, Australia-based vendor's 5,500 customers use its JIRA problem-tracking software, which must be installed on computers, rather than its Confluence enterprise wiki online service.

"We don’t regret building our business on software that needs to be installed behind the firewall," Walker said. "We think it’s important to have a hosted product. But installed software is still the bigger market."

The first crop of start-ups offering online productivity applications tended to trumpet their ambitions to overthrow Microsoft Office. The perceived failure of Microsoft thus far to back up its software-and-service vision with either its Office Live or Windows Live initiatives only seemed to validate the message of the Office 2.0 upstarts.

But several stark realities have seemed to hit many of those vendors. First, the initial excitement over the online application market created a gold-rush mentality, leading to too many barely distinguishable competitors in a still-tiny market.

"The world doesn’t need another Web calendar program; that would just exacerbate the problem today," said Andrzej Kowalski, CEO of Time Search Inc., the Vancouver, British Columbia-based maker of the Calgoo calendar application. True to Kowalski’s words, Calgoo’s hook is that it serves as a sort of ‘supercalendar,’ letting users integrate their schedules from desktop applications at work running on Outlook and Lotus Notes with the shared Web-based calendars they use at home, such as Google Calendars.

"A [venture capital firm] called us the Trillian of the Web calendar space," Kowalski said, referring to the instant messaging program that allows users to send and receive instant messages on multiple services. Calgoo works closely with Google Calendar, but with the 20MB file download, it also runs on the desktop when users are not connected to the Internet. Changes that users make are automatically synchronized with other calendars the next time the user is online.

Executives said this hybrid mode is a key differentiator. "I do think it’s a big mistake to think that people are always online," InvisibleCRM’s Voskresensky said. "A good sales rep is always outside the office selling. So we need to give him the ability to work while he’s offline in-transit."

Eager for news of new blending tech

Existing hybrid application makers say they rely on tools such as Adobe Systems Inc.’s Flash technology with Asynchronous JavaScript and XML to deliver a blended experience. But they also say they are eager to hear about new technologies such as Adobe’s Apollo.

Other executives said that tactics have changed because they recognize that while cutting-edge, esoteric features may impress many technically-savvy and cost-conscious small to midsize businesses and consumers, enterprise CIOs are not as easily moved.

Reliability and ease of integration with their existing infrastructures may move them to plunk down millions of dollars for software or services, they said.

"We’re not trying to fight Outlook or any other existing ecosystem," said Faizan Buzdar, CEO of Scrybe, which offers an online organizer. Scrybe synchronizes with existing calendar data in a user’s Outlook and Lotus Notes work accounts, as well as online calendars such as Google Calendars.

Scrybe can also run both online and, through a small download, offline as well. Changes that users make while offline are automatically synchronized back to Scrybe as well as any other of the users’ accounts.

That directional shift has been prompted by the recognition by Office 2.0 start-ups that their long-term survival may depend on appealing to deep-pocketed big businesses, rather than tightwad consumers and small and midsize businesses.

"It’s always easier to get an extra $10 from someone who already pays $100 then to get $1 from someone not paying anything at all," Voskresensky said.

Of course, some speakers at the conference still toed the party line. At Salesforce.com Inc., "we’re religious about not going forward with a product that requires a download," said Bruce Francis, vice-president of corporate strategy at the SaaS standardbearer.

Others say even a free product download can present a roadblock to users. "Every barrier you put up means you lose 90% of your potential users," said Rob Hayes, a partner at venture capital firm First Round Capital.

Marc Gingras, a three-time Canadian IT entrepreneur, whose latest start-up, a peer-to-peer meeting-planning service from Tungle Corp. that also has an offline desktop component, had one retort: "Tell that to Skype." The popular peer-to-peer Internet phone service claims that its software has been downloaded more than 500 million times and that it has more than 9 million concurrent users.

Copyright © 2007 IDG Communications, Inc.

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