Prithwis Mukerjee, a professor of management at the Indian Institute of Technology, Kharagpur in eastern India, needed a convenient and low-cost way for his students to create spreadsheets. But rather than turn to Microsoft, the granddaddy of spreadsheet software, he opted for a lesser-known maker of free, Web-based software that gives his students more flexibility than Microsoft’s Excel. “Many people don’t have Excel, and that becomes a big challenge,” Mukerjee says.
Aiming to meet that challenge are two California-based upstarts. One is Google, owner of the most popular Web search engine, and the other is Zoho, the maker of online business productivity tools that won over Mukerjee as a customer. Microsoft dominates the market for productivity tools in the U.S. as well as developing markets, but Google and Zoho hope to narrow the lead by emphasizing the lower price and broader accessibility of their products. “There’s more of an open field that is there for the taking,” says IDC analyst Frank Gens, adding, “They don’t have to kick out Microsoft.”
The market for productivity software in Asian countries, though smaller than in the U.S., is growing more than twice as fast. In 2008, sales of productivity software totaled $1.2 billion in the region, according to technology researcher Gartner, a 13.2 percent increase from the previous year. In North America, office software grew 6 percent, to $6.7 billion in the same period. In both parts of the world, Microsoft commands about 95 percent of the market, and the share hasn’t budged in either place for the past three years.
First-Time Users Embrace the Cloud
A key selling point for both challengers is price, especially with budget-conscious small businesses and schools such as IIT Kharagpur. But the entrants also hope customers embrace a new type of software model, where files are created, edited, and shared online,…