Taking on the Office gorilla, online

Following Google's acquisition of hosted productivity software start-up Writely in March, there has been an increased buzz around the potential of online Office-like apps to upset Microsoft's dominance.

Silicon-Valley based start-up ThinkFree is one of the hopefuls, alongside the likes of Numsum, GOffice and FlySuite, that are hoping to grab a chunk of the multi-billion dollar business that Microsoft currently controls. It is thought that Office generates around 40 percent of Microsoft's revenues and up to 60 percent of its profits — supporting such less profitable endeavours as MSN and the gaming division.

ThinkFree claims to have focused on delivering the highest level of compatibility with Microsoft Word, Excel and PowerPoint documents, but differentiates itself by being largely free and by making use of online collaboration. The company offers around 1GB of upgradeable online storage and easy insertion of images through Flickr, the online photo management community owned by Yahoo.

ThinkFree is aimed mostly at consumers and students, but the company has plans to offer an online suite for the small and medium-sized business market later this year that would provide additional storage and other fee-based services. ThinkFree also claims to have attracted interest from enterprises that are looking to host ThinkFree behind their firewall as a more effective way of delivering Office to thin clients.

ThinkFree chief executive T J Kang was visiting London this week to meet with potential investors. ZDNet UK caught up with him to discuss surviving the dot-com crash, surfing the Web 2.0 boom, and get cosy with Yahoo.

Q: The idea of a completely hosted alternative to Office has only really attracted much mainstream attention since Google bought Writely — how long have you been working on the idea?
A: The first full version of the service debuted in 2000 in Palm Springs, California. We did raise quite a bit of media attention then. Microsoft was battling the Department of Justice and we were seen as this small company that had take on an 800lb gorilla. Speaking at the time, Steve Ballmer said that although Linux was the number one threat to Microsoft at the time, we were also on his radar. So for a while there we had this red dot following our foreheads, but we ended up disappointing Ballmer as there just weren't enough consumers with broadband at the time to make the business work.

Although you are looking to take a chunk of Microsoft's Office business, you also make a lot of the compatibility your products have with theirs.
Whether we like it or not, we live in an MS-centric world. Office is not really proprietary anymore — it has become a de facto standard. It is not a standard that has been approved by a standards body, but it's a standard.

Aren't you afraid that Microsoft is going to launch a hosted version of Office and make your offering redundant? They are already making noises in this area with Office Live.
Microsoft probably will enter this space in some shape or form — they have enough resources to do it. But one problem is that I don't think they have a business model. Microsoft doesn't want to give away Office.

They like to talk about Windows and Office Live but I don't think they can really put their hearts into that business model. They gave away IE, but did it to kill Netscape, and gave away Windows Media Player to kill RealPlayer. There was no real revenue from Windows Media Player or IE, so there was no impact on their bottom line. But Office is different, if they decided to give away part of it then their stock price would tank.

Google has shown that you can give away everything, but Microsoft can't do that — it is very hard to be your own agent of destructive change. They will drag their feet...