Zoho, the most active Web 2.0 company around, is considered as a direct competitor to Google for quite some time now. Today, Zoho will announce Zoho Business at Office 2.0 conference. Essentially, they are categorizing their services into Zoho Personal and Zoho Business. Zoho Personal is same as their current offerings. It includes all the apps currently offered to users and it will remain free forever. Zoho Business comes in two flavors, free version and pro version. The free version will remain free, as the name suggests, and the pro version will include more features than the free version.

I contacted Raju Vegesna, Zoho evangelist about the difference between the free and pro version. He told me that they will finalize the exact features in the coming months. However, he pointed out that pro version will have more apps by default and will have more add-ons as part of the package like more storage, telephone support, additional administrator control, more customization options, better security, etc.. Zoho Business will include

and more. Even though the final price of the pro version is not finalized, it is expected to be around $40 per user per year. This is comparable (in fact, slightly cheaper) with the price of Google Apps. Like paid versions of Google Apps, Zoho Business Pro version will also have an uptime guarantee. But Zoho hasn’t decided on the terms yet.

With this announcement, Zoho has entered into a direct head on competition with Google. The nimbleness of Zoho puts its products at a much better position than Google. They offer more apps with better features compared to Google’s offerings. But Google has the advantage of having better infrastructure and a well known brand name. Zoho still faces an uphill task in this market with competitors like Google and Microsoft. It is a tough sell for a small company against such powerful competitors. However, Zoho is optimistic about its future. They are targeting small businesses from around the world including many countries where Google is not a big player yet. They feel that there is enough space for a smaller company like theirs even with Google and Microsoft running amok in this segment. I feel that their nimbleness is their greatest advantage. The speed at which they introduce new features to existing products and new products will help them stand apart from their well known competitors. It is also necessary on the part of Zoho to openly discuss about their infrastructure and how they will ensure redundancy. Another important issue is the security of user’s data. If Zoho addresses these two issues openly, it will go a long way in boosting the confidence of small businesses convincing them to bet their business on Zoho’s services.

Zoho Business is in private beta now and will step into public beta next month. It is expected to go live in the first quarter of 2008.