Taking on the Office gorilla, online

... and they will pay lip service to expanding their hosted model, but I don't think they will be aggressive or creative. I am hoping that the delay will give us the room to capture a small but significant portion of their business. I don't think everyone will switch, but small businesses or consumers will not pay $400 for Microsoft Office.

Google is obviously your other big competitor. Where you surprised when they announced their acquisition of Writely, and do you think you'll be able to compete?
Google buying Writely was actually a big help for us. It raised awareness around the online Office space, and showed that the big guys are really interested in this area. We think we are much better than Writely in terms of our feature set. We did talk to Google at the time, and still talk to them now. But our goal is not to develop something quickly and be bought out; I think we have something that can grow. It is good to have partners but you have to remember that an Office suite is a huge business — about $10bn (£5.3bn). Microsoft makes about 60 percent of its annual profit from Office, which they use to underwrite their loss-making businesses like Xbox and MSN.

A tie-up or acquisition by Yahoo would help you to compete with Google/Writely — what is your relationship at the moment?
We talk to them from time to time and make use of their APIs for our integration with Flickr. Maybe something more will be offered in the future — we are talking.

What is your exact business model at the moment? I guess it's mainly advertising-driven, given that you aren't charging subscriptions.
Our business will include advertising. Right now we don't have any ads on the site but we will in the next couple of months. They will mainly be contextual ads related to the information people are viewing.

So how are you surviving at the moment, if you have no ad revenue — are you living off venture capital investment?
We have a corporate sponsor — a Korean software company called Hansoft. They claim that everytime our name is mentioned alongside theirs in the press, their stock price goes up. Yahoo claims the same thing happens for them with Flickr. We will also be looking to launch a subscription-based service later this month, which will contain premium services such as the ability to turn off ads and customer support.

What about the enterprise space — do you think ThinkFree will be adopted outside of the consumer and small-business markets?
We have five large companies using ThinkFree internally behind their firewall as way of delivering office applications to thin-clients or PCs. Employees can run their ERP and mail in a browser now, and have no real reason to go out of browser apart from to access Office. If a machine breaks then the machine can just be changed if all your applications are hosted, but that can't happen at the moment with Office. Companies have tried using Microsoft Office over Citrix but it proved to be hard to implement and the user experience was fairly poor.

So how are you looking to grow your installed base this year?
We have around 100,000 users currently but are looking to grow that to around 1 million by the end of this year. Our original goal was about 300,000 but we think we can exceed that.

Are you looking to expand into other regions — are there international versions of ThinkFree?
The site is only available in English at the moment, but the actual tools are multi-region. We don't have accurate plans for foreign versions of the site yet, as we want to have success in the US market first with English speaking users. We have around 55 developers at the moment and five sales people, so that is not really enough to go to other countries, but we may look to partner with local ISPs.