Zoho slows frantic growth, works on integrating Web apps instead

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 startup, remains an enigma for a $22 billion-a-year giant ostensibly committed to beating Microsoft Office.

Instead, it's been the little guy, Zoho Corp., which 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 one, a Salesforce.com-rivaling 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 hard its now 350-strong Indian development team, Zoho has thrived while others,, like ThinkFree have faded.

Not only does Zoho have more than 2 million paying and free users, its revenue has been growing at a rate of 40% per year (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 said). Zoho expects to hit profitability by year's end, Vegesna said.

"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 a boon for Zoho. And he's unworried about the potential entry 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.

Integrating with more popular third-party apps is a priority, he said, mentioning Intuit Inc.'s QuickBooks as one possibility. So is improving the smartphone versions of Zoho.

"Frankly, we haven't made the progress there they deserved," he said. Zoho plans to build iPhone and Android clients for the CRM and its other more popular business apps this year. Building an iPad client, however, is not a priority, since its large screen should let it work well with the Web version of Zoho, he said.

Zoho is looking at rebuilding its offline client using HTML 5. The offline version is built now with Google Gears, which Vegesna believes is slowly being retired by Google.

It's not a big priority, though.

"Usage is pretty low...less than 1% of users," he said. "The reality is that when people are offline, they go and grab a coffee."

Eric Lai covers Windows and Linux, desktop applications, databases and business intelligence for Computerworld . Follow Eric on Twitter at @ericylai or subscribe to Eric's RSS feed . His e-mail address is elai@computerworld.com .

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Copyright © 2010 IDG Communications, Inc.

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