This is the 5th year we've done this and many of the small companies we choose each year go onto much bigger things. Here's a quick look back at previous winners:

• In 2004 Ludicorp, creators of Flickr, was named Best LittleCo and Feedburner Most Promising. Both of course have since been acquired (by Yahoo! and Google respectively).
• In 2005 37Signals was Best LittleCo and Memeorandum (now Techmeme) and Digg were joint Most Promising.
• In 2006 YouTube was Best LittleCo and Sharpcast Most Promising.
• In 2007 Twitter got Best BigCo and (in a bit of a break from tradition) we named "the open source movement" as most promising - a loose-knit group that aims to make a huge impact by tying all Web companies together. Last year we thought there was no single Web company that was more promising, and we have probably been proven right as our Best Web Platforms 2008 post showed (OpenSocial, Android, Mozilla Weave, Fire Eagle, ...).

Now let's find out who is ReadWriteWeb's Best LittleCo of 2008...

Best LittleCo of 2008: Zoho

We felt that Web Office vendor Zoho best represented the 'LittleCo' ethos this year, due to its David vs Goliath effort in competing head on with products from several very large companies: Microsoft Office, Google Apps, Salesforce.com's core CRM platform.

Zoho not only competed with these bigcos, they were innovative and scrappy about it. And in a year that will be remembered for the economic downturn, Zoho is a reminder to us all that we can work ourselves out of a down economy.

Zoho made two of our year-end Top 10 Products list - in the International category and in the Enterprise catagory. It is an Indian startup that offers a number of office tools, project management software and CRM solutions. It made serious advances with its office productivity suite during 2008, reaching a milestone of 1 million users in August this year.

Some of the specific highlights this year include: updating Writer at the beginning of 2008 to include support for the DocX file format, along with several other features; adding support for Visual Basic compatible macros to Zoho Sheet in April, then macro record and playback four months later; releasing a marketplace in September; Zoho Mail emerging from private beta in October, while offering offline support via Google Gears.

Our one note of caution with Zoho is that, as you can see from the above screenshot, it has so many products that it potentially spreads itself too thin. Some of its products show a lack of depth as a result - we focused on some of those issues in a post in September. So we're not claiming Zoho has the Web Office market cracked, just as Twitter had some issues last year when we chose it as our Best LittleCo. But overall, we applaud Zoho for its continued innovation and for competing effectively against the big guns!

After the jump, ReadWriteWeb's pick for Most Promising for 2009!