Saturday, March 1, 2008

Made in India - Software as a product company

It came as a breath of fresh air to read about an entrepreneur who has successfully built a software product out of India for the global market, and is competing with household names elsewhere. Even more impressive were the following facts:

- This is a 100% bootstrapped effort, with no outside funding.

- Some of the "engineers" who are coding this software are high school graduates with 9 months of training. Without this job, the prognosis for the future of these individuals is not particularly encouraging. I applaud this social element which Mr. Vembu has successfully combined with the financial success of his venture.

More about Mr. Vembu and his venture can be found here.

Ms. Mitra has published an interview with him on her blog.

I first stumbled across Zoho at the Web 2.0 expo held in San Francisco from April 15 through 18th last year. It piqued my curiosity since Google had not rolled out the spreadsheet functionality completely, whereas Zoho had a spreadsheet program I could use. I played with it for a while and though I liked it, found Google more convenient since I am already a Gmail user. I returned to their website recently after reading the Forbes article and found that they have introduced a whole slew of applications since. I am sufficiently intrigued to check out "Zoho show" and will post a review soon.

The one thing that struck me as unusual is that Zoho is competing purely on price. Few companies, if any, have managed to sustain growth and profitability with pricing as their sole competitive advantage. With software in particular, once the code is written, debugged and staff salaries paid, there are no limits as to how low the price can be slashed by a competitor. Even a penny per customer is a profit in this case, unlike physical commodities where rock bottom pricing will equal lowest manufacturing cost. It remains to be seen how Zoho fares and whether the Googles of the world will bankrupt the Zohos by offering the software free, since their revenue stems from elsewhere.

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