Home JotSpot Case Casts Doubt on Future of Web Office Startups

JotSpot Case Casts Doubt on Future of Web Office Startups

Recent Google acquisition JotSpot found itself the
subject of unwanted attention this week, when an early customer complained of being shut
out after the Google deal. A blog
by someone named Kevin (no last name supplied) had all the gory details, but
Kevin then subsequently deleted it (note: I’d already read it before it disappeared).
Techcrunch then
posted the cached text
of the post. My concern when I first read it wasn’t so much
for the damage to JotSpot’s reputation (which the company is more than capable of
defending), but the implication that hosted applications in general carry more risk
than people normally assume
. Here’s the key extract from Kevin’s post:

“Pick your hosted application service provider well. Relying on web hosted application
services is much more dangerous than I ever would have assumed. This is especially true
for those services that are “closed source” like those of JotSpot.”

What’s more,
in the Techcrunch comments
another person who claims to have been a JotSpot customer
has his/her say:

“I can’t reveal much about my experience with Jotspot either, but our company
has been heavily screwed because of the merger.

After the merger, Jotspot went on some kind of blackout as far as communications, and
a portal we developed on jotspot’s servers is half-assedly done, but the developer
can’t do anymore work because Jotspot has been quiet on whether they will pay him
or whether google will. Unfortunately, we already have 50 customers (NOT USERS,
CUSTOMERS) not understanding why basic functionality is not fully developed.

We’re probably going to dish out tons of cash to redevelop the portal on another
engine entirely.

Thanks, Jotspot. Thanks a ton.”

To his credit, JotSpot CEO Joe Kraus then
leaps into the comments
to defend his company. He says that Google has a policy of
“not announcing anything about future product direction” and so “our ability to give any
sense of timeline and capability is extraordinarily limited”. Joe promises they’re not
going to abandon their partners and customers. Now, I have a lot of admiration for Joe
Kraus and I think he’s one of the smartest people in the valley. Nevertheless, the sense
here is that JotSpot’s customers have indeed lost out in this deal – and there’s not a
whole lot JotSpot can do about it because of Google’s restrictive policies. So where does
that leave the customers?

Peoples faith in web hosted applications has been shaken by this – and in particular
in the Web Office realm, where hosted applications have a lot of business value invested
in them by their customers. How can customers be guaranteed that a Web Office company
acquisition (or worse, a bubble burst) won’t negatively impact their own business?

This problem isn’t new – back in the dot com days these types of hosted providers were
known as ASPs (Application Service Providers). But ASPs very rarely replaced entire
office suites (in particular Microsoft Office). In the case of Web Office, over the past
year or so some of us have been talking up the potential of a whole business being run on
a hosted platform – which is of course a threat to Microsoft Office. However the smaller the hosted provider is, the bigger the risk. Just as Amazon has a decided advantage
providing hosted infrastructure (S3 etc), the likes of Microsoft and Google (with their
own apps) have a big advantage over the smaller Web Office providers.

This has to be a concern going forward for Web Office startups. How on earth can they
convince customers that they’re as rock solid a (business) investment as purchasing a
license for Microsoft Office, or downloading OpenOffice? Will they need to open source
their technology, as Kevin’s post alludes to? Or will it just require tightening up the
service level agreements for customers?

And from the Web Office startup’s point of view, how difficult does this make it for
them to compete with Microsoft or Sun Microsystems? Imagine a Microsoft ad campaign that
has as its main message: ‘why take the risk of running your business on a small startup’s
servers?’ It’s not that far fetched an idea for an ad campaign.

I’m interested in your thoughts, because obviously I think Web Office startups have a
lot to offer in terms of innovation and Web native functionality. But the business risks
are something they need to overcome, to gain the trust and uptake of customers.

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