C.G. Lynch @ CIO.com on Zoho

In an article titled 'Understanding Zoho, the Quiet Company Taking on Google and Microsoft', C.G. Lynch does a comprehensive take on Zoho. Excerpts from the article :

Zoho is betting on the cheapness of delivering software over the Web and hosting the data on their own servers to cannibalize the traditional "on premise" method of businesses buying software (like Microsoft's) on discs and installing it manually on employee workstations and company servers.

Zoho's software doesn't care what kind of hardware companies use, or what operating systems run on top of them. People merely need an internet connection and a Web-browser to access and use Zoho applications.

"Software is commoditizing as a result," says Sridhar Vembu, the CEO of both Zoho and its parent organization, AdventNet, a privately held company that handles IT support and data center maintenance. "It's going to be a more high volume, low margin business now."

As Zoho expanded the capacity of its data centers and its developers began building more online software beyond its first application (Zoho Writer, a word processor), the vendor gained more interest from small and medium sized businesses (SMBs), such as law firms and doctors offices who were looking for minimal IT costs, says Raju Vegesna, the company's chief evangelist. They have also received business from non-profits and the public sector, such as Teachers Without Borders and the Hawaii State Government.

More recently, they have begun seeing interest from large enterprises, particularly on the departmental level, where they have taken advantage of some of the collaborative functions (such as document sharing and wikis) and the addition of CRM software.

Many parts of Zoho's offering are free for up to a few users. Unlike Google Apps, their experience is not subsidized by ads.

Zoho has focused on bringing the rich functionality of Microsoft Office to the Web, something Microsoft themselves have failed to do for fear of cannibalizing their current business model of delivering software on premise and with higher margins. Zoho also used a Google tool, Google Gears, to make portions of the Zoho applications suite work offline.

Thanks, C.G. Lynch, CIO.com for the nice article and Jonathan Yarmis of AMR Research for the comments.