The basic value proposition of cloud computing is that your desktop―that place where you get your work done―is now itself a creature of cyberspace: detached not only from your desk, but from any particular device. One company both promoting and operating on this idea is Zoho, which not only offers a growing library of SaaS applications, but is itself an example of how a company can use the cloud to become a citizen of the world. Zoho’s headquarters are in Pleasanton, California, a technology center east of San Francisco. But most of the company’s thousand or so employees do Zoho’s development work in Chennai, India. And some of Zoho’s biggest milestones come from Japan, including the company’s first large corporate and OEM customers, as well as a partnership with NTT Communications. Zoho has offices in Yokohama and Beijing.
Raju Vegesna, Zoho’s chief evangelist, has taken his own international career path. He was born in Andhra Pradesh, India, studied computer science in the southern state of Karnataka, whose capital, Bangalore, has become India’s technology hub, and now lives with his family in California. Vegesna has also become the “face” of the company, a frequent contributor to Zoho’s blog and the guy who gets quoted in the U.
“I love technology and love working on products―and even today I still do,” Vegesna told me in a phone conversation. “At night, I work with India-based product teams to give them my ideas. But in the daytime I love talking to people. In 2005 nobody knew about Zoho, so an important challenge was to get the word out―and I said I would do it.”
That word is now indeed out, not just about Zoho, but for SaaS in general. Zoho’s larger competitors include Google, Salesforce.
For the SaaS sector, the short answer to all of the above is to have more evangelists answering those questions―software developers who love not just technology, but talking to people.
- How do you coordinate development in India, headquarters in the U.
S., and markets in China and Japan? That’s a simple answer: we use Zoho applications. In fact, we first built these applications to meet our own needs. Initially we were working as if we were on separate islands, using the phone to connect us. Our tools have made a big difference compared to five years back―we are much more productive. And of course, if we could meet the needs of a thousand-person company, we could certainly meet those of smaller businesses.
- You are your own best proof of cloud computing.
Absolutely, we find immense value in these applications and couldn’t imagine going back.
- Your relationship with Google seems both friendly and competitive. Would you call it “coopetition”
? Yes, it is absolutely coopetition. Companies must learn to cooperate with their competition: that’s the future. You will inevitably have customers who will want to use both―and so coopetition is something you have to live with. In this case, I think the market is certainly large enough for multiple players. Google is not going to kill Zoho, nor will Zoho kill some other Web application player―as long as we are all providing good value.
But we also have a strong relationship with Google because both of us see a great value in Web-based applications and want to move that sector forward. I would even say that Google is the best thing that happened to Zoho. Prior to Google entering the market, people didn’t understand why they should do their word processing, for example, online. Then, after Google entered, people asked us how we were better than Google. So Google validated the market, changing perceptions along the way. For that reason, I’m also looking forward to Microsoft entering the market.
- Microsoft dominates the office market. Do you fear that the company might use that strength to attract more than their share: people who want the comfort of a familiar application suite?
Not entirely. For Microsoft, this is not just a technology issue, but a pricing issue. Microsoft has a lot to lose in offering a free online version of their office suite. So they will have to think hard about their fee structure. For many business customers, price, more than familiarity, will be the deciding factor. This is a problem that Zoho and Google never had to confront, because neither of us had a shrink-wrapped legacy to defend. Does Microsoft keep their existing revenue or do they move to where the future is? I do think that Microsoft will maintain its leading marketshare. But I also think they will further validate the market while leaving plenty of room for other players. That’s true in the shrink-wrapped business, as well. Even WordPerfect, which many people gave up for as dead, is still selling in the form of Corel’s WordPerfect Office.
- When Google announced they would stop supporting Google Gears, you posted a blog statement thanking the Google team for the heads-up and pledged support for HTML5. That seemed surprisingly understanding on Zoho’
s part considering the development time you must have invested. Google Gears has been an interesting learning experience for us in a couple of ways. We use it to provide offline support, which we began offering because some people complained that our applications didn’t include it. But we soon noticed that only a very small percentage of our customers were actually using it. Offline turns out to be a checklist item: it’s about how people perceive they’ll be using a Web application, rather than how those applications are actually used.
Meanwhile, HTML5 has been evolving, with many browsers supporting it. So when Google made its announcement, we didn’t have any concerns because we know that HTML5 is going to be the future, one that doesn’t require users to install a plug-in. If we were them, we would do the same.
That said, we do use Flash in certain applications, like Zoho Notebook for video and audio recording. But building an entire application on top of Flash was too much of a stretch. My view on plug-ins is that they address holes in existing browser technology. When the browsers mature, the plug-ins will no longer be needed. That’s what is happening now where the HTML standard is catching up with the reality of how the Web is actually used. Flash was initially started to address that the browsers were not going fast enough. Now the browsers are evolving and the plug-ins are going to go away. We’re seeing that with GIF and will probably see that with Flash, though it might take quite a while.
- How does Zoho make money on its apps?
All our applications are free for individuals, and we offer a good free version for every single application we make. We offer upgrade versions if your usage exceeds the limit―and that limit varies, depending on the application. For our office suite, we impose no limit for individuals, but we do for companies who want administrative controls for sharing and publishing documents. We’ve taken other approaches, as well. For example, our Zoho Business suite offers email hosting, document management, a calendar and more free for the first three users. We want people to try it out. For the fourth user and beyond, we charge $5.
00 a month per user. - What development tools do you use?
We use an open source stack. Linux at the operating system level, MySQL for the database―using our own extensions, and at the development language level, we’ve used Java entirely for the past 14 years, and a customized, secured version of the Apache Tomcat Java servlet.
- How did Zoho start selling in Japan?
We began about eight or nine years ago. We were selling network and device management software, and got some interest from a Japanese printer manufacturer. We expanded our customer base from there, and now we’re pretty strong.
- What has been the response to Zoho applications in Japan?
The demand for us in Japan is surprisingly strong compared to China, where a lot of users still prefer the pirated version of Microsoft Office. The difference is also related to broadband penetration. In Japan, that penetration is pretty high and the usage has been similarly high, as well―actually more than I would have expected. We now have several large Japanese companies who are looking at our products, and have signed a deal with NTT Communications, one of Japan’s largest service providers.
- Does collaboration matter more in Japan than elsewhere?
Collaboration is important in Japan, but mobility is even more so: the fact that you can use a Web application from anywhere, on any device. You don’t need to install anything on your laptop or phone: all you need is a browser.
- Do you see cultural differences in how developer teams in different countries work?
In very general terms, I’d say that the Japanese developers tend to be meticulous about how they think about every tiny detail of a project. They pay more attention to pre-planning on one hand and documentation on the other―whereas in India, we sometimes move on too quickly after we’ve got the basic functionality coded. Ideally, you want to do both: get the functionality, and spend the time to perfect it. That’s a benefit we get when our Japanese developers visit our India office. They often stay for a month or two, enough to form a strong team with complementary skills. Another benefit of course is that our teams are thinking much more about internationalization. That’s true for China, as well.
- Where is SaaS headed? Will SaaS applications become the norm? Will shrink-wrapped applications disappear?
Native apps may not disappear entirely―we still use mainframes too, right― But we think SaaS apps are the future and will replace shrink-wrapped software in the next decade. The benefits are obvious both from the user’s perspective as well as that of developers and vendors. At Zoho, we can't even imagine developing shrink-wrapped apps. We want to be one of the important vendors in this space.
