Zoho is the latest software as a service company which is threatening to topple Google and Microsoft. We've taken a look behind the scenes to find out just what the company is offering - and how.

Zoho is a software company that's got Microsoft and Google firmly in its sights. It's already bypassed venture capital funding and rebuffed an acquisition offer from Salesforce.com. Now the software as a service (SaaS) company that delivers its products over the web is emerging as a clear competitior.

Launched in 2005, Zoho offers a wide range of online software, including email, a word processor, spreadsheets, wikis, and even a customer-relationship management (CRM) application that it sells to sales and marketing departments. In all, Zoho sells 17 productivity and collaboration apps, all for prices that, by traditional software standards, are dirt cheap.

For the whole lot of Zoho's business applications, it costs a mere £25 per user per year (the same price that Google asks large enterprises for its Google Apps software). By contrast, Microsoft Office Professional, the popular software found on workstations throughout most of the corporate world, retails for as much as £330 a pop.

Like Google, Zoho is betting on the cheapness of delivering software over the web and hosting the data on their own servers to cannibalise the traditional "on premise" method of businesses buying software (such as 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 commoditising as a result," says Sridhar Vembu, the CEO of both Zoho and its parent organisation, 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."

Despite Google and its deep pockets to invest in Google Apps, Zoho stays competitive with Google on price. Vembu has a 200 person developer team in India releasing new features rapidly. In the process, industry analysts say Zoho has developed a product capable of competing, impressive given what it's up against.

"They've got more applications than Google [Apps]," says Jonathan Yarmis, an analyst at AMR Research that examines emerging technologies.

"The apps they have are richer. They just don't have the publicity vehicle that Google has."

Analysts such as Yarmis say Zoho has built a compromise between what's being offered by Microsoft and Google. Microsoft software, such as Office, has been criticised as bloated with features that most people don't use and as too expensive. Google's Google Apps have been described as cheap and pretty, but lacking some essential features found in Office.

NEXT PAGE: Who buys Zoho?

  1. Understanding Zoho
  2. Who buys Zoho?
  3. How Zoho intends to handle Microsoft and Google
  4. What to expect from Zoho, and why