New office software options are emerging as small businesses look to trim costs.

Make no mistake, Microsoft (MSFT) - Get Report (Stock Quote: MSFT) and the small businesses that use its products are facing a tipping point. Between the flop that's Windows Vista and unprecedented competition for office software, the company is close to becoming a big brand in search of a market. Google (GOOG) - Get Report (Stock QUote: GOOG) isn't the only company causing pain for Steve Ballmer and crew; now even small firms are threatening Microsoft's dominance.

Take scrappy Zoho, a unit of AdventNet. The Pleasanton, Calif.-based company recently introduced a new version of its word-processing tool, Zoho Writer 2.0. The Web-based product is free for individuals. The upgraded software organizes functions with user-friendly tabs. There are also idiot-proof invite features for document sharing and options for blog and wiki publishing. I have been testing the product in my office and it's worth considering if you're contemplating life after Microsoft.

(MSFT) - Get Report (GOOG) - Get ReportWhat you get: With Zoho, you get a free word processor that's packed with features found in pricier computer-based tools.

(MSFT) - Get Report (GOOG) - Get Report Zoho offers 19 online business tools including Zoho Mail and Zoho Writer, which shouldn't be confused with Zoho Docs, which manages documents. There's software for managing projects, tracking sales, Web conferencing and more. With this level of ambition, it's not surprising that the products are thin. I haven't felt compelled to switch to Zoho products even though they compete with everything from Excel to NetSuite (N) .

(MSFT) - Get Report (GOOG) - Get Report (N) But the new Zoho Writer is forcing me to reconsider the company. The software could be particularly useful to all the newly minted independent contractors out there trying to make ends meet in these hard times.

(MSFT) - Get Report (GOOG) - Get Report (N) First off, Zoho CEOr Raju Vegesna has made Writer more user friendly. Functions are organized clearly with tabs, making features easier to navigate.

I liked how easy it was to share documents whether it's within a group or through a blog or wiki, which allow users to enter and edit content. All and all, Zoho offers a robust word-processing experience. Although it may not be all you expect from an established program like Microsoft Word, it's good for everyday use.

(MSFT) - Get Report (GOOG) - Get Report (N) What you don't get: Zoho is slick, but you're still creating documents online. This isn't a bomb-proof, state-of-the-art word processor. The software is subject to the vagaries of potentially conflicting Web languages, so things can go wrong. Cutting and pasting content from remote sites, for example, is a drag.

Also, some functions were clunky. The spell checker, a critical tool to us small business people who are functioning illiterates, is an annoying two-step process that missed many mistakes I would expect Microsoft Word to catch.

(MSFT) - Get Report (GOOG) - Get Report (N) Bottom line: Serious word mavens, or businesses that handle digital content, should stick with Microsoft Word. Zoho isn't stable or powerful enough. But for average business documents, Zoho is a reasonable alternative.

It's easier to use and offers richer features than other online tools, such as Google Docs. Best of all, there's no beating the price. There's no more beautiful word these days than "free."

(MSFT) - Get Report (GOOG) - Get Report (N) If you're just dipping your toe into the Web-collaboration waters, give Zoho a try. I promise it won't hurt.

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