Web-based productivity apps may be where software is going, but the budding market will also see its share of casualties. One early casualty could be ThinkFree, which looks to be in turmoil.

The company’s Web-based versions of Office never really gained much traction—they trail well behind Google Docs, Zoho, and others. Founder and CEO TJ Kang is on the outs with Haansoft, the Korean software company he sold a majority stake to in 2003. ThinkFree’s chief marketer Jonathan Crow just left (Update: the company took this down, see cached version), explaining that ThinkFree and collaborative online tools are “evolving to the next stage” and that Korean parent company Haansoft:

. . . is now taking a more active role in the strategic and tactical activities of ThinkFree. They are now deep into what this shift means for our development roadmap as we head into 2008.

Is that marketing speak for, “There is no money in online productivity apps and Haansoft is pulling the plug”? Not necessarily. The Website is still up and running, and all subscribers were upgraded to premier accounts about a week ago.

It sounds more like the company’s Korean masters have put ThinkFree in a holding pattern until they figure things out. One tipster tells us that ThinkFree has shut down its San Jose, California headquarters. Calls to that office just keep going to voicemail. But a spokeperson assures us that there are still people there.

We won’t put ThinkFree in the deadpool quite yet, but it is on death watch.

A new survey by NPD has found that the 73% of Americans have never heard of Google Docs and other online office applications, but perhaps worst still only 0.5% of respondents have abandoned desktop office applications for an online alternative. 94% of Americans have never tried a web based productivity suite.

To be fair though, the survey was of “600 PC users” so it (possibly) didn’t count Mac users for example, nor really ask enough people to even be a statistically valid survey of computer users.

Although some will undoubtedly use the figures as proof that online applications are failing to gain popular acceptance, they do represent an opportunity waiting to happen. Google and others are working hard to change the way businesses use basic services such as wordprocessing with a continued marketing push into the enterprise sector. The challenge is to overcome over 25+ years of what people consider to be normal (desktop apps) by proving that the online alternative is ready and capable of being used. There’s little doubt today, at least based on OS X and Linux adoption figures that there is a very real and definite move away from Microsoft, accelerated by the disaster that is Vista. Whilst there are always desktop alternatives on both platforms, there will be a continuing number of users who question the need to buy Microsoft Office, be that as an upgrade for an existing OS, or brand new as they switch to Mac. It’s a slow switch, but given the online alternatives there is little doubt that the number making the switch to online apps will continue to grow.

(via Download Squad)

ThinkFree Premium Edition, a desktop client that provides seemless Microsoft Office style functionality both offline and online launched in closed beta recently, and we have free invites for TechCrunch readers.

The first 50 readers to email techcrunch@thinkfree.com will obtain instructions and access to the beta trial of ThinkFree Premium.

ThinkFree premium edition provides the same features as the online version of Thinkfree, but on the desktop. Features include file sync functionality that keeps online and offline documents up to date, including automatic uploading of documents created in the desktop app to ensure everywhere access; an archiving feature, full screen viewing and high priority tech support.

Online office suite ThinkFree will announce a new partnership with Team and Concepts Limited (TnC) Tuesday that integrates TnC’s EditGrid spreadsheet application with ThinkFree. The agreement allows ThinkFree to replace its current Quick Edit Calc with the more advanced EditGrid. The deal includes a revenue-sharing agreement between the two companies.

The deal is said to deliver ThinkFree “the most advanced real-time collaboration spreadsheet on the market”.

With EditGrid, ThinkFree users will be able to collaborate on spreadsheets simultaneously and see changes happen in real-time. A Remote Data feature will provides access within the spreadsheet to external data, allowing those sources to be updated in real time.

Power Edit Calc allows for a more complex functions set and provides an improved level of compatibility with Microsoft Excel.

Thinkfree was the first company to launch an online office product and despite intense competition from none other than Google, the company continues to innovated and evolve. Previous TechCrunch coverage here.

Online office suite ThinkFree joins the community sharing crowd Tuesday, with the launch of a number of new features.

The new (beta) version of ThinkFree Docs will allow users to search, share, tag and publish Microsoft Office and ThinkFree documents in an online social community, much in the same way that Flickr allows photographers to publish and share photos.

I’m told the thinking from the ThinkFree team was to get these features out to users now, with aesthetics to follow. And yet from what I’ve seen of the new service, I can’t fault the look. The new community tools build on an already pleasant interface, having nearly a YouTube feel to them (minus the videos).

The addition of tagging is immediately evident. Documents viewable by the community now come complete with ratings, embedding code, comment fields, downloading options and the obligatory post this to Digg/ Furl/ del.icio.us buttons. In many ways it’s moving into the territory previously claimed by Scribd, the new features at ThinkFree share a lot of similarity with Scribd, and yet they are not exclusive unto themselves, building upon an already very smart online Microsoft Office alternative.

Thinkfree currently has 275,000 users. Previous TechCrunch coverage here and here.

ThinkFree CEO TJ Kang will be giving a presentation later today at Ajax World, talking about Ajax applications and the future of ThinkFree’s online document, spreadsheet, and presentation quick editors. In April, ThinkFree will be releasing new version of their Ajax architecture that will more accurately and efficiently handle uploaded documents, particularly Microsoft’s.

ThinkFree’s new architecture picks up where other Ajax editors break, large file sizes and preserving the uploaded file formatting. As an example for the document editors, files like this one on ThinkFree currently break Google Doc and Zoho Writer. Google chokes on the 1MB file size, and Zoho Writer jumbles the formatting (see here).

Google tries to keep the file size small (512 KB) to keep accessibility wide, because Ajax editors have to accommodate browser memory limitations. Zoho doesn’t have as low a file size cap, but if you edit a large document in it’s editor, you can watch your browser’s memory usage jump as you add more content (particularly images). To get around these issues ThinkFree will be using four tiers of storage when the new version is fully implemented. On the client side, ThinkFree will just store the data that the user is most likely to need in the browsers memory and cache, with the rest waiting in their server memory and hard disks.

To better handle presentation issues, ThinkFree tracks formatting made to uploaded Microsoft files, which can’t be reliably emulated in Ajax editors. CSS turns out to be really good at doing layout, but a beast when it comes editing tricky formatting such as text spilling over into multiple columns or images anchored to text. To work around this problem, ThinkFree keeps track of the documents formatting when uploaded, warns you if an edit will break the document, and reapplies the MS formatting upon download. You can see more technical details within their presentation.

While the changes will be most noticeable when their document editor switches over, ThinkFree will also be revamping their lagging online presentation product, adding a WYSIWYG Flex editor.

ThinkFree currently has over 250,000 registered users with 10% of those using their application at least once per week. Although they also have a more powerful online JVM file editors, the Ajax versions are more frequently used. In the near future, power users will be able to use a lighter version of their desktop editors to manage and sync their ThinkFree documents online.

ThinkFree is also almost a year into a three year deal with Korea’s largest search engine, Naver, (which according to Kang accounts for 67% of Korea’s search traffic) to handle their user’s email attachments within their browser.