This past week, I had the pleasure to attend the Techcrunch40 event.  The opportunity to see 140 companies in a two day period was both great and, at times, overwhelming.  For every great thinng I saw, I also paid the tax of 2-3 less-than-stellar ideas, but some of the stuff was really well done (like the Korean-based Musicshake).  During the event, a really exciting thing happened: the news of Yahoo’s acquisition of Zimbra broke.  I thought that was a really creative move by Yahoo.  I am a big fan of the platform.  It is nimble and extensible, and has some nice content parsing and widget constructs built into it.  If you want to get a sense of the flexibility, check out the work done by two engineers to do a GMail knockoff, or the work done in a few days to do a nice iPhone implementation.

While conjecture has it that this acquisition was done to create a compelling solution for the SMB market and the university environment (certainly logical), I hope they give it broader consideration as a platform to allow testing of more radical email experiences to the core consumer base they have (the ability to do quick A/B testing for mail would be unique among the majors).

Rarely does a company have a chance for a greenfield solution for something as important as email.  All of us have solutions that we have evolved over the years, which brings with it some amount of legacy baggage.  This acquisition (which will benefit hugely on your knowledge of making things cost-effectively scale) has a chance to really move a dial for you at a critical moment.  Here’s hoping we see you take it to a whole new (and open) level.

Now that the Zimbra acquisition is done, the next expected shoe to drop is that Yahoo will now need to acquire a web word processor and spreadsheet solution (with Zoho being the leading candidate) to expand their solution set to go head to head with Google Apps.  To me, the move to expand the solution set is almost mandatory, given Yahoo’s email leadership position, but the acquisition of Zoho would miss consideration of an opportunity to take web-based productivity tools to a whole new level.

A little background:  The whole office-apps-on-demand space began 6 years ago with ThinkFree, a JAVA-based toolset that was designed (with some foresight) to deliver a RIA (rich internet application) experience both online and offline.  At the time, no one else was pushing the envelop, in terms of desktop JAVA-based consumer offering.  To me, it was a really bold science experiment.  It delivered a message that perhaps the mass market didn’t need as robust of a desktop tool as where Word and Excel has gotten to, and that a ground-up approach to focus on the 10% of the functionality most folk used might be the basis for a compelling offering.

Unfortunately, the whole install process (both time-to-first-use and the actual install dialog itself) was not a great one for the early adopters, the use of desktop JAVA became a bad horse to ride technically (in terms of being at odds with the industry, who jumped on the AJAX and Flash bandwagons), and the solution itself languished.

Over the next few years, you saw some new AJAX-based word processing solutions emerge.  Now the market has a number of interesting offering, ranging from Zoho, to Writeboard, to Glide Write, to the leader, in terms of market awareness, Google and its Writely-based solution.

We’ve also seen the solution set expand to include spreadsheet tools (decent) and presentation tools (uniformly weak).  Most of these web-based solutions have some common attributes:

Import from and save to Microsoft Office formats

Lightweight footprints (fast startup)

Simple functionality exposed in a pre-Office 2007-ribbon toolbar layout

Basic formatting controls (bullets, numbering, indenting, bolding/italics, etc.) and formula support

Minimal offline operations support (e.g., Zoho’s use of Gears to allow viewing, but not editing, of documents)

Limited font options.

Are they useful?  You bet!  For basic word processing and spreadsheet needs, I find they hit the mark 60+% of the time.  The challenge is that not one of them really breaks out of the pack, and the presentation tools are not even close to being useful on a day-to-day basis.

Given the state of the market, and a hypothesis that Yahoo is interested in having a competitive offering here, what makes the most sense?

One path is the acquisition of Zoho, which would indeed give them a Google Apps competitor in short order.  That certainly is where the smart money is betting, but does this represent a lost opportunity?  To me, the answer is yes.

I think that a new generation of consumer web-based productivity tools are starting to emerge from the great work being done in Flash 9 and AIR (FYI, Kevin Lynch is one of my heroes).  I offer two great early stage companies as examples:

The first is Buzzword, a new word processing solution from Virtual Ubiquity.  Using the product, I found myself really believing that it could be the basis for a robust online and offline word processor I could use day to day.  The team has done a really nice job of surfacing detailed formatting ability, table manipulation and other features (floating photo support, etc.) in a very intuitive, not all Microsoft-derivative manner.  The solution is both similar and different from my Office experience, and I give them credit for taking risks with the user interface – it rocks for a beta product!

Here are a few screenshots (none of which do justice to some of the nice mouseover events they incorporate):

The second tool is Empressr, a presentation tool from Fusebox.  The most recent beta they showed me at Techcrunch gets the fact that, in our rich-media focused world, our presentation tools need to embrace easy access and incorporation of video, animation, etc., and not ignore it like the AJAX solutions seem to do (due to its complexity).  Unlike last week’s release by Google of Presently, which seemed to have less functionality that their word processor, this was a tool that I could see myself using to develop really visually compelling presentations.

But here is the rub, if you are Yahoo:  Do you go with the flow, and adopt a solution suite that makes due with the best that AJAX can deliver today, or do you take a risk and leap into the RIA experience head-first with an Adobe technology-based solution?  (If you did want to go down another technology path, you might make the case to build the productivity tools in Microsoft’s Silverlight, but given the fact you would need to wait till release 1.1 in 2008 to get offline support, and I don’t see emerging office tools there, I am not sure you could spare the time.)   I think this is a key decision point for Yahoo, as it looks for opportunities for differentiation.

Maybe the world doesn’t need to be so binary (I find binary discussion of options to be more provocative, so I beg forgiveness).  I do think we all need to form our own opinions here on online/offline RIAs and their potential acceptance/adoption by a broad base of consumers.  I would just suggest that you get hands-on access to both Buzzword and Empressr (the newest beta) as you each shape your own worldview on how quickly the landscape of RIA is evolving.  It’s well worth the time – this is only one battlefront for RIAs – you’ll see the same battle emerge in the CRM space, the media player space, and other sectors over the next 12 months.

Net net, the promise of free, robust on-demand offline-capable office tools is already becoming a reality, probable sooner than many of the principals thought.  Each player needs to craft its own gameplan here sooner vs. later.  Given all the moves we have seen and will see in the next several months, I am not sure how Microsoft’s Office-on-Demand offering can find a comfortable, profitable place in this changing landscape, but, as consumers, we all stand to benefit…