October 9, 2006 4:00 AM PDT
'Office 2.0' start-ups knock on business doors
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That's why, ultimately, many Office 2.0 start-ups will have to form partnerships with telecommunications companies or Internet service providers, said Ismael Ghalimi, the organizer of the San Francisco conference. Those partners can sell the online service to corporate customers and offer unified billing. Generally, business customers will not want to use ad-supported software, which is common in consumer applications. They would rather have a well-organized purchasing process, he said.
"Even if the Web lowers the barrier to entry, it doesn't mean that customers will come to you in droves. You still have to do marketing and build your channels," he said. "Most of the innovation comes from the smaller players, but they don't have the channel. Even if I'm Google, it's difficult to get people to give me their credit card."
Ghalimi noted that several Office 2.0 companies are selling both to large enterprises and to small and medium-sized businesses, which is a break from the traditional enterprise software business.
"Distribution is everything," said Frank Zamani, CEO of Caspio, an online database company. "With large companies, we could go after them ourselves, but reaching hundreds or thousands or millions of small and medium-sized businesses directly is not practical."
Zamani said that Caspio is seeing more large-scale use of its database application within businesses. He added that the company is looking to form distribution relationships with Internet service providers.
From a product-design point of view, many Office 2.0 companies are starting fresh. They are focusing on the benefits of hosted software, such as mobility, collaboration and easier installation.
SmartSheet is trying to address the management of team projects, a job that is often handled with spreadsheets. The problem is that versions of the spreadsheet get out of sync when people rely on e-mail, and it's difficult to audit the history of changes to jointly authored documents, said John Creason, the company's chief technology officer.
With SmartSheet's service, people can dole out tasks to others and store relevant product information in a single place. Notifications can be sent out via e-mail, which can be significant when people are working with others outside the company.
Rather than expecting an outside contractor to check a Web site, an e-mail-based form is sent to that person, which automatically updates common documents stored at SmartSheet.com.
Rather than overtake Office, Ghalimi predicted that many Office 2.0 services will continue to complement Microsoft's software. Over the next few years, businesses may use them more and more at the expense of installed versions of Office, as they experiment and find good uses for alternatives.
"The biggest impact these services might have on Microsoft is that it will make it significantly harder to justify the upgrade to Windows Vista and Office 2007," he said.
"What will happen is what we've already seen with e-mail clients like Gmail and Hotmail, which are very good," Ghalimi said. "They will creep in on an application per application basis."
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