I've used both Google Docs and Zoho Writer previously and they are a useful way to collaborate, especially for projects involving librarians at multiple institutions. The ability to chat with collaborators from within Zoho is a nice feature, although at one point we ended up switching to the phone to work out a problem because it was easier! In theory, I also like Zoho Notebook, which allows you to build a project that includes multiple types of files--documents, spreadsheets, web sites, etc. However, in practice, we've had problems with it, as the contents of many documents in the notebook aren't appearing. I'll admit, this could be more a problem with us not understanding how to share documents properly rather than with the application itself.
As far as straight word processing goes, Google Docs and Zoho Writer seem equally capable--I didn't have a problem creating and editing a document in either one. Google Docs' autosave feature is a little annoying at times, but its interface is a little clearer. One feature that would be helpful is automatic notification if others have edited the document. I didn't see that this was possible in either application, but perhaps I just missed it.
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