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One reaction to Microsoft’s announcement of Office 2010 which we find amusing (or whatever the term that is appropriate in discussing one’s own obituary) is “This spells the end of Zoho.” What most people fail to realize is that while the online Office suite is certainly an important part of Zoho, we have in fact a portfolio offering which now includes over 20 different business, collaboration and productivity applications.

But if there’s anything I’ve learned from my years in the tech world is that  companies don’t get killed by competition, they usually find creative ways to commit suicide. Office 2010 will be the end of Zoho, if we stop innovating, stop being nimble and flexible in our business model. Then again, if we stop all that, Zoho will die anyway, no Office 2010 needed to do the job. There are numerous examples in the technology industry to illustrate this. Consider two companies of similar vintage, both of whom faced Microsoft: Borland and Intuit. Which company has done better? Does that have to do with their competition with Microsoft or their own ability to innovate and adapt?

Having said that, it is obvious that Office 2010 will impact what customers expect from Zoho. Assuming Microsoft does a great job (which they usually do), we may have to adapt our strategy to compete. Their natural advantage is their size and their installed base; our natural advantage in such competition is being nimble and flexible, spotting opportunities and grabbing them quickly. That is not new for us – after all, that is how we have survived Google; 3 years ago when Google entered this market, it was also deemed to be the end of Zoho – now, just how many times are we supposed to die? All of Zoho was about 30 people at that time, and now it is over 300. We have released over 15 new services in Zoho after Google’s entry into the market, and made numerous updates to all our services. Zoho was “pre-revenue” (boy, do I feel nostalgic for that term – please God, just one more bubble!) in 2006, and today we are a substantial business, growing rapidly. No I don’t mean growth just in terms of users; I mean growth in paying customers, with every single one of them becoming a paying customer after Google’s market entry, meaning that if customers were worried Google would kill us, they wouldn’t be doing business with us. During that same time, we have forged strong partnerships across the landscape, with many more partnerships to be announced in the coming months. If this is death, we are really enjoying it!

Having under 350 people in Zoho gives us a natural flexibility in evolving our business model. For starters, we are the easiest company for partners, large and small, to work with and many times part of the value we bring to some other prospective companies is exactly that we are not Microsoft nor Google. Those partnerships mean real paying customers and revenue, which means Zoho has the economic vitality to keep innovating. Second, there is a reason Zoho provides a broad suite of applications – there are applications like CRM, Projects, Creator, Meeting, People, Invoice and so on that face a different competitive landscape, allowing us to thrive even as we face the most formidable software company on the planet. Finally, it is a common mistake to assume that business models that worked well in the past will continue to work well in the future, even as the technology landscape changes. A company like Zoho has a lot more strategic flexibility than Microsoft has – not having to protect a $16 billion high-margin revenue stream is one important reason. What all that means is that while there is no risk of Zoho killing Microsoft anytime soon (!), we are also confident we won’t die because of Microsoft.

In much the same way we don’t view Google as the mortal enemy, we don’t view Microsoft as the mortal enemy. We do not view competition in moral good vs evil terms. To be sure, there are important moral questions – my favorite one is what the Federal Reserve is doing to our money, an important moral question, with profound implications for society, though not one normally seen that way – but there are no profound moral implications in which word processor you use to compose that love letter or even that annual report, that’s for sure. When competitors fight, customers win, that is all there is to it.

In any event, hating competitors is a good way to lose objectivity and lose focus on customers. That is why we embrace Google-promoted standards and technologies, but we also support a wide variety of Microsoft products in the Zoho suite, including the Zoho plug-in for MS Office. Indeed, with the Zoho plug-in, you can get a most of the collaborative features promised for Office 2010 even in Office 2003. When we embrace such technologies, all we ask are: Will this help customers? Will it provide so much value to them that they want to pay for it?

We have been in business for over 13 years now, and at numerous times, facing “mortal” challenges on numerous occasions – in fact, I remember a conversation in 1997 when a prospective partner told us “I don’t see how you are going to survive against X”. Not only did we survive X (no we didn’t survive by “killing” X, they are also around!), but we actually did well enough to gain capital and experience to build more software, enough to have arrived at “I don’t see how you are going to survive against Microsoft.” May be we really should worry when people stop asking that “survival” question, because that’s when we get complacent.

  1. Fong-Wan Chau

    I just finished reading this post coming from the another post of @Joel in Buffer (https://open.buffer.com/joel-questions/). I finished reading and then looked at the date, how awesome blog from 2009!

    You absolutely survived in the competition between you and Microsoft! Great job!

  2. Tyseo

    It’s sad to see that somes companies are going to die because of bad technologic choices. It’s even worse when you know them personnaly and even worser when you work inside these companies.
    I’ve see it happen with pro vs anti internet back in time (in France we had the “Minitel” that was like the internet but only in black and white)

  3. Tyseo

    It’s sad to see that somes companies are going to die because of bad technologic choices. It’s even worse when you know them personnaly and even worser when you work inside these companies.
    I’ve see it happen with pro vs anti internet back in time (in France we had the “Minitel” that was like the internet but only in black and white)

  4. Max

    Having worked for many companies and now running my own company I have fortunately and unfortunately seen many companies kill themselves with an isolated view. This can be that they either see their company as being bullet proof, they focus on what management feels is best as opposed to listening to customers and employees on the front line. This is a relatively quick death. There are also those companies which reach a certain point and are happy there. This is a usually a long slow death.My closing piece of advice is if a business is not in it for the long run, sell before you are worthless.

  5. Max

    Having worked for many companies and now running my own company I have fortunately and unfortunately seen many companies kill themselves with an isolated view. This can be that they either see their company as being bullet proof, they focus on what management feels is best as opposed to listening to customers and employees on the front line. This is a relatively quick death. There are also those companies which reach a certain point and are happy there. This is a usually a long slow death.My closing piece of advice is if a business is not in it for the long run, sell before you are worthless.

  6. Sachin

    I completely agree with you..in fact ISW (innovation, simplicity and willingness to win) are the 3 keys to success…

  7. Sachin

    I completely agree with you..in fact ISW (innovation, simplicity and willingness to win) are the 3 keys to success…

  8. Fabrique Multimédia

    Business may commit suicide but this will always be innovation mindset that will make the difference between small business and big corporation

  9. Fabrique Multimédia

    Business may commit suicide but this will always be innovation mindset that will make the difference between small business and big corporation

  10. suvarna

    While the Google threat (and others) will probably get more palpable as time goes by, I agree with Sridhar’s view thatcompanies don’t get killed by competition; they commit suicide.Nevertheless, one area where I believe that the company needs to improve is in its customer messaging or marketing in general. For instance, instead of a list of applications on the homepage, it would make more sense to quickly set up customers depending on their specific vertical or business process

  11. suvarna

    While the Google threat (and others) will probably get more palpable as time goes by, I agree with Sridhar’s view thatcompanies don’t get killed by competition; they commit suicide.Nevertheless, one area where I believe that the company needs to improve is in its customer messaging or marketing in general. For instance, instead of a list of applications on the homepage, it would make more sense to quickly set up customers depending on their specific vertical or business process

  12. rabblevox

    I guess this comment could be considered part of
    the “long tail”. Sridhar not only brilliantly
    explains the value of competition in the SaaS
    marketplace, he single-handedly convinced me that
    Zoho was worth a shot. And so far, I have been
    delighted. (the 1 caveat is that they are not
    fully compatible with the Opera browser yet…a
    serious shortcoming)

  13. rabblevox

    I guess this comment could be considered part of
    the “long tail”. Sridhar not only brilliantly
    explains the value of competition in the SaaS
    marketplace, he single-handedly convinced me that
    Zoho was worth a shot. And so far, I have been
    delighted. (the 1 caveat is that they are not
    fully compatible with the Opera browser yet…a
    serious shortcoming)

  14. Thejesh GN

    Completely agree with the title.

  15. Thejesh GN

    Completely agree with the title.

  16. Sambamoorthy

    Sridhar,
    It boils down to ‘survival of the fittest’. The consumers are always discerning and they will let one who is good both pricewise and qualitywise, howsoever big the name and fame of the competitor.
    Sambamoorthy.

  17. Sambamoorthy

    Sridhar,
    It boils down to ‘survival of the fittest’. The consumers are always discerning and they will let one who is good both pricewise and qualitywise, howsoever big the name and fame of the competitor.
    Sambamoorthy.

  18. kuba filipowski

    great article. thank you for sharing! 🙂

  19. kuba filipowski

    great article. thank you for sharing! 🙂

  20. John

    I have been using Microsoft Office since the very beginning and I have used Google Docs in the past as well. ZOHO is a much better suite of tools. Period. I also just switched from Batchbook to SOHO CRM and it rocks!Keep up the good work!- John

  21. John

    I have been using Microsoft Office since the very beginning and I have used Google Docs in the past as well. ZOHO is a much better suite of tools. Period. I also just switched from Batchbook to SOHO CRM and it rocks!Keep up the good work!- John

  22. ashish.sinha

    Real stuff, I must say.
    I believe a lot of drama is staged by blogs/media who do not know about one thing – the power of execution.
    If one is executing, no competition can beat them..All the best to you guys!

  23. ashish.sinha

    Real stuff, I must say.
    I believe a lot of drama is staged by blogs/media who do not know about one thing – the power of execution.
    If one is executing, no competition can beat them..All the best to you guys!

  24. Agree Totally

    Excellent post. Healthy, principled competition makes us better. “Competitors” can become partners. We should always be looking at the “ecosystem” of our respective industry and see where we can be moving to be successful. Innovate, innovate, innovate! Otherwise, close down!

  25. Agree Totally

    Excellent post. Healthy, principled competition makes us better. “Competitors” can become partners. We should always be looking at the “ecosystem” of our respective industry and see where we can be moving to be successful. Innovate, innovate, innovate! Otherwise, close down!

  26. Carlos

    Sridhar, I liked your reasoning a lot. Keep up the good work¡¡¡

  27. Carlos

    Sridhar, I liked your reasoning a lot. Keep up the good work¡¡¡

  28. sushaantu

    I am impressed with the way ZOHO has operated in a fiercely competitive space against the ruthless software behemoths. This article does provide a glimpse of some of the qualities and a clear understanding of the environment that are spearheading the growth and innovation at ZOHO. It’s indeed encouraging to hear of a small player making great strides against the competition who live with the arrogance of ruling the web or our operating systems. I have recently started to use my zoho account as the backup of all the emails I receive across my various email accounts. The point is that I am confident that my emails will be secured in my zoho account. The internet is full of real stories of people who lost their email accounts without any notification or anything from google. I just can’t afford to risk that.

  29. sushaantu

    I am impressed with the way ZOHO has operated in a fiercely competitive space against the ruthless software behemoths. This article does provide a glimpse of some of the qualities and a clear understanding of the environment that are spearheading the growth and innovation at ZOHO. It’s indeed encouraging to hear of a small player making great strides against the competition who live with the arrogance of ruling the web or our operating systems. I have recently started to use my zoho account as the backup of all the emails I receive across my various email accounts. The point is that I am confident that my emails will be secured in my zoho account. The internet is full of real stories of people who lost their email accounts without any notification or anything from google. I just can’t afford to risk that.

  30. Paul Datta

    I am sure the Office suit (MS) will work better if you pay for it. I also have a feeling that Microsoft is trying to add features like webEx (slideshare?) to their online powerpoint (social networking to others like onenote aka wave?).Do you think online software (like yours) will always work better considering the fact that they do not have tie-ins with desktop software?More innovation = Excitement for web developers like me.
    Hang on and enjoy the ride.

  31. Paul Datta

    I am sure the Office suit (MS) will work better if you pay for it. I also have a feeling that Microsoft is trying to add features like webEx (slideshare?) to their online powerpoint (social networking to others like onenote aka wave?).Do you think online software (like yours) will always work better considering the fact that they do not have tie-ins with desktop software?More innovation = Excitement for web developers like me.
    Hang on and enjoy the ride.

  32. KeeptItCool

    You say that “For starters, we are the easiest company for partners, large and small, to work with and many times part of the value we bring to some other prospective companies is exactly that we are not Microsoft nor Google.”But my company is a Google Apps provider and would like to start offering Zoho apps (more applications and better features in many areas) and it has been difficult to get an answer from Zoho about a partnership.Regarding Microsoft or Google, just go ahead and don’t fear competition!
    In my opinion Google Apps would be a much better if Google bought Zoho! 🙂

  33. KeeptItCool

    You say that “For starters, we are the easiest company for partners, large and small, to work with and many times part of the value we bring to some other prospective companies is exactly that we are not Microsoft nor Google.”But my company is a Google Apps provider and would like to start offering Zoho apps (more applications and better features in many areas) and it has been difficult to get an answer from Zoho about a partnership.Regarding Microsoft or Google, just go ahead and don’t fear competition!
    In my opinion Google Apps would be a much better if Google bought Zoho! 🙂

  34. Mark Thurman

    Great post Sridhar.It certainly got me thinking about how I and others use Zoho. I think MS will certainly do a great job technically, but not so sure about how well they will ‘get’ web apps.The Zoho suite has been developed vertically to add product depth and maturity (such as macro support etc) but the last years drive towards product integration has brought great benefits.Can MS produce a product with similar levels of features as its fat client? If they crack that can they also develop the levels of integration required to match or exceed Zoho? I personally doubt it. Especially as the proposed web versions of office apps dont compete on the same basis as the Zoho line-up.You see to me, its not just about office productivity apps. When I use Zoho I barely think about them, they are simply part of the landscape that also allows me to use Business apps such as Zoho CRM, Zoho Project 2.0, Zoho Creator/Reports and Zoho People in a fluid manner.It is in this final area that MS comes up short. Maybe Azure will be a game changer for a wider platform of apps. Maybe we will see versions of MS Project or MS Access on the web, but not yet and not for a while i think. I am sure when these come they will be reliant on SilverLight and IE’x’ making the recent strong gains by FF and others doubly important.Meanwhile the likes of Zoho and a hundred other SaaS and PaaS providers will make big strides forward. These companies will shape the landscape, these are the innovators and the brave. Kinda like the old land-grab in the wild west!My money is very firmly on Zoho to continue to lead the innovation race and thrive on the competition.Thanks
    Mark

  35. Mark Thurman

    Great post Sridhar.It certainly got me thinking about how I and others use Zoho. I think MS will certainly do a great job technically, but not so sure about how well they will ‘get’ web apps.The Zoho suite has been developed vertically to add product depth and maturity (such as macro support etc) but the last years drive towards product integration has brought great benefits.Can MS produce a product with similar levels of features as its fat client? If they crack that can they also develop the levels of integration required to match or exceed Zoho? I personally doubt it. Especially as the proposed web versions of office apps dont compete on the same basis as the Zoho line-up.You see to me, its not just about office productivity apps. When I use Zoho I barely think about them, they are simply part of the landscape that also allows me to use Business apps such as Zoho CRM, Zoho Project 2.0, Zoho Creator/Reports and Zoho People in a fluid manner.It is in this final area that MS comes up short. Maybe Azure will be a game changer for a wider platform of apps. Maybe we will see versions of MS Project or MS Access on the web, but not yet and not for a while i think. I am sure when these come they will be reliant on SilverLight and IE’x’ making the recent strong gains by FF and others doubly important.Meanwhile the likes of Zoho and a hundred other SaaS and PaaS providers will make big strides forward. These companies will shape the landscape, these are the innovators and the brave. Kinda like the old land-grab in the wild west!My money is very firmly on Zoho to continue to lead the innovation race and thrive on the competition.Thanks
    Mark

  36. jovialn

    Zoho is an excellent product. That being said I do beleive you will have a tough time converting prospective customers now that microsoft is having an online offering. But I agree that innovation is the key and though I dont think that Zoho will be able to compete in creation editting of standard documents, I do believe that Zoho can offer specialized targetted offerings which can be leveraged by consumers and corporations alike. Keep Innovating.

  37. jovialn

    Zoho is an excellent product. That being said I do beleive you will have a tough time converting prospective customers now that microsoft is having an online offering. But I agree that innovation is the key and though I dont think that Zoho will be able to compete in creation editting of standard documents, I do believe that Zoho can offer specialized targetted offerings which can be leveraged by consumers and corporations alike. Keep Innovating.

  38. maluvia

    Excellent post.
    Your perspective on the nature of the competitive process and your perception of it as an ally rather than an adversary is one of the many reasons Zoho is succeeding so well and continuing to gain market share.I further believe your focus on understanding what your customers want, and how they want to do things, as opposed to a top-down, “We decide what you want, and how you should and shouldn’t do things” is another important element in your formula for success.
    I don’t think I am alone in feeling that the big players like Google and Microsoft have abandoned any concern for what their users want and need, which is why I have abandoned them in favor of Zoho.
    I could give many, many examples of the kind of disdain and unapproachable posture adopted by these companies, but I think we all know what they are.
    When was the last time you could bring up a problem or make a feature request with Microsoft or Google and actually have a human being with a face respond – and within 24 hrs at that?I feel as though Zoho cares about, and is really there to serve its user base, rather than merely using them in the pursuit of its profits.
    (Not that I see Zoho as a public service – I want to see it flourish financially, as it deserves to.)Glad the news of your demise has proven to be premature.
    I’m betting on Zoho to continue to successfully meet its competitive challenges and thrive – both today, and tomorrow.
    May You Live Long and Prosper 🙂

  39. maluvia

    Excellent post.
    Your perspective on the nature of the competitive process and your perception of it as an ally rather than an adversary is one of the many reasons Zoho is succeeding so well and continuing to gain market share.I further believe your focus on understanding what your customers want, and how they want to do things, as opposed to a top-down, “We decide what you want, and how you should and shouldn’t do things” is another important element in your formula for success.
    I don’t think I am alone in feeling that the big players like Google and Microsoft have abandoned any concern for what their users want and need, which is why I have abandoned them in favor of Zoho.
    I could give many, many examples of the kind of disdain and unapproachable posture adopted by these companies, but I think we all know what they are.
    When was the last time you could bring up a problem or make a feature request with Microsoft or Google and actually have a human being with a face respond – and within 24 hrs at that?I feel as though Zoho cares about, and is really there to serve its user base, rather than merely using them in the pursuit of its profits.
    (Not that I see Zoho as a public service – I want to see it flourish financially, as it deserves to.)Glad the news of your demise has proven to be premature.
    I’m betting on Zoho to continue to successfully meet its competitive challenges and thrive – both today, and tomorrow.
    May You Live Long and Prosper 🙂

  40. Joining Dots

    IMHO, Zoho hasn’t much to worry about. Office web apps provide a much needed solution for enterprise companies wanting to go web within their borders because of easier integration across apps whilst still falling back on the client app for the heavy work. Going web outside of borders is a different approach entirely and needs a web app designed for the web from the ground up rather than as a compromise.

  41. Joining Dots

    IMHO, Zoho hasn’t much to worry about. Office web apps provide a much needed solution for enterprise companies wanting to go web within their borders because of easier integration across apps whilst still falling back on the client app for the heavy work. Going web outside of borders is a different approach entirely and needs a web app designed for the web from the ground up rather than as a compromise.

  42. slotwek

    I’ve started with Google – mainly because of Google’s Notebook… After some time, I heard that Google is not going to invest more in Google Notebook because they didn’t get profit… I was really worried that one day I won’t reach my notes. However, under the note where I found this information I found link to Zoho – so, I’ve checked it. To be honest – I was amazed. The same day I started to move my notes “by hand” to Zoho Notebook. Nowadays, I can’t imagine to live without it. It’s just perfect – and fulfils my needs. I believe in you guys and I hope you will make a revolution in the market. Keep going 🙂

  43. slotwek

    I’ve started with Google – mainly because of Google’s Notebook… After some time, I heard that Google is not going to invest more in Google Notebook because they didn’t get profit… I was really worried that one day I won’t reach my notes. However, under the note where I found this information I found link to Zoho – so, I’ve checked it. To be honest – I was amazed. The same day I started to move my notes “by hand” to Zoho Notebook. Nowadays, I can’t imagine to live without it. It’s just perfect – and fulfils my needs. I believe in you guys and I hope you will make a revolution in the market. Keep going 🙂

  44. drewhyde

    Go Sridhar,The most important line is “Having said that, it is obvious that Office 2010 will impact what customers expect from Zoho. Assuming Microsoft does a great job (which they usually do), we may have to adapt our strategy to compete.” Emphasize, “which they usually do”, and it keeps the focus on business strategy.Technology is only one piece of the puzzle, Microsoft embraced the web many years ago, what they did not embrace was a change in their business model – much like Borland, but they have more money to burn.Being in a business where we are competing against behemoths, I understand what Sridhar is talking about. The idea is that a small company is engaging in assymetrical competition and is able to enter the market with very small opportunity costs and almost no legacy costs. For Microsoft, or Apple, or Salesforce, or Google … to do what Zoho is doing is almost impossible because of their legacy committments to employees, markets, etc. …, and the opportunity/entry costs in terms of intellectual or strategic capital cannot be borne by their shareholders – who ultimately make this determination.Reality is Azure, and even Zune will probably ultimately be profit centers for Microsoft, though their margins will be in line with commodity levels. The same will eventually happen with Apple and Google also. The Zoho difference is that Sridhar created the company based on the realization of the commoditization process and will not have to abandon a defunct and toxic business model a decade or two out. Like true free-range cattle, Microsoft and the others are going to have to skinny up or die, not Zoho – they can survive a very, very long time.In reality, Sridhar, I would hold that your “rantlet” regarding the Federal Reserve is actually about the same thing. Companies and industries that built themselves on high-margin exclusivity, being saved from the pain of the commoditization process and their inability to face reality and compete. That is angry-making and immoral. Anyway, topic for a different discussion.Thanks for thinking and talking Sridhar.Drew

  45. drewhyde

    Go Sridhar,The most important line is “Having said that, it is obvious that Office 2010 will impact what customers expect from Zoho. Assuming Microsoft does a great job (which they usually do), we may have to adapt our strategy to compete.” Emphasize, “which they usually do”, and it keeps the focus on business strategy.Technology is only one piece of the puzzle, Microsoft embraced the web many years ago, what they did not embrace was a change in their business model – much like Borland, but they have more money to burn.Being in a business where we are competing against behemoths, I understand what Sridhar is talking about. The idea is that a small company is engaging in assymetrical competition and is able to enter the market with very small opportunity costs and almost no legacy costs. For Microsoft, or Apple, or Salesforce, or Google … to do what Zoho is doing is almost impossible because of their legacy committments to employees, markets, etc. …, and the opportunity/entry costs in terms of intellectual or strategic capital cannot be borne by their shareholders – who ultimately make this determination.Reality is Azure, and even Zune will probably ultimately be profit centers for Microsoft, though their margins will be in line with commodity levels. The same will eventually happen with Apple and Google also. The Zoho difference is that Sridhar created the company based on the realization of the commoditization process and will not have to abandon a defunct and toxic business model a decade or two out. Like true free-range cattle, Microsoft and the others are going to have to skinny up or die, not Zoho – they can survive a very, very long time.In reality, Sridhar, I would hold that your “rantlet” regarding the Federal Reserve is actually about the same thing. Companies and industries that built themselves on high-margin exclusivity, being saved from the pain of the commoditization process and their inability to face reality and compete. That is angry-making and immoral. Anyway, topic for a different discussion.Thanks for thinking and talking Sridhar.Drew

  46. michael.mucha

    I left Office behind 2 years ago for Google Docs, and now I’m migrating to Zoho from Google. I imagine there are many more people like me who have no particular love for Office, and a long memory for Microsoft’s worst behavior. I have no interest in ever going back. So, there should be plenty of room for a leader like Zoho. It’s the ones further down the line who really need to be worried.And the MSFT Office team has resisted Web 2.0 for so long, they’ll have plenty of opportunity to trip in their rush to embrace the Web. I’m reminded of a quote I saw yesterday on another site, “Azure will do for cloud computing what Zune has done for portable media players!”

  47. michael.mucha

    I left Office behind 2 years ago for Google Docs, and now I’m migrating to Zoho from Google. I imagine there are many more people like me who have no particular love for Office, and a long memory for Microsoft’s worst behavior. I have no interest in ever going back. So, there should be plenty of room for a leader like Zoho. It’s the ones further down the line who really need to be worried.And the MSFT Office team has resisted Web 2.0 for so long, they’ll have plenty of opportunity to trip in their rush to embrace the Web. I’m reminded of a quote I saw yesterday on another site, “Azure will do for cloud computing what Zune has done for portable media players!”

  48. Alain Risbourg

    hi Sridhar,I fully agree with what you have written in this post : everything about great management is in it.I sincerely wish that people will never stop asking you that “survival” question about your company.Alain

  49. Alain Risbourg

    hi Sridhar,I fully agree with what you have written in this post : everything about great management is in it.I sincerely wish that people will never stop asking you that “survival” question about your company.Alain