Redmond Review

Andrew Brust Explores Microsoft's Office Alternatives

• By Andrew J. Brust
• 06/01/2010

Microsoft Office 2010, the new version of Redmond's flagship productivity suite, offers great value through important new features. But we're now on version 14 of a product whose origins go back more than 25 years. How can Microsoft keep turning out new Office versions and continue to realize cash cow-sized revenue? Microsoft can do it, but only if it changes its Office game in fundamental ways.

To a large extent, Office is two products. On the one hand, it's a consumer and small business offering with basic word processing, spreadsheet, presentation and e-mail capabilities. Let's call this manifestation of the product "Office SOHO" (small office/home office). On the other hand, Office is an enterprise productivity suite providing publishing, business intelligence, unified communications, Web conferencing, forms processing, note-taking and collaboration features. Let's call this interpretation of the suite "Office Corporate."

These two faces of Office make the product versatile, but they create a huge PR problem for Microsoft. Office Corporate -- and its upgrades -- provide huge value, but the product is often reviewed, analyzed and criticized from the SOHO perspective, where upgrades seem superfluous, pricing looks high, and Web-based competitors seem just as good, if not better. This perception on the SOHO front impacts the Corporate zone, too.

SKU Confusion
Why the one-sided set of criteria? Many tech analysts, bloggers and journalists use the SOHO feature set and tend to work on non-corporate computing platforms. This is true of increasing numbers of consumers, as well. Office Corporate is invisible to them. Office SOHO seems long in the tooth and even longer on price.

Microsoft has a consumer productivity suite called Works, which has often been bundled with consumer PCs. It's cheap, capable (in that "good enough" way) and relatively simple and straightforward to use. But most people use Office at work and prefer its functionality and file formats. Plus, there's significant expense and complexity for Microsoft in maintaining two productivity suites. So Microsoft has announced that Works is going away, and Office 2010 Starter Edition -- a SKU offered exclusively on new PCs -- is, essentially, its replacement.

Meanwhile, a growing number of customers use OpenOffice.org, Google Docs and Apple iWork. These products (even glorified smartphone file viewers like DataViz Documents To Go) are eroding the Office market share. They offer features Office doesn't: iWork for the iPad has a touch-oriented UI; Google Docs is easy to use when you're online, especially if you're not on your own PC; and Documents To Go works across Windows Mobile, Android, iPhone and BlackBerry devices.

Going SOHO
In response, I think Microsoft needs a dedicated SOHO product, not just a new Office SKU. The company needs to give it commodity features and a price to match; it must also align the new product's file format with Office, both for compatibility and to leverage the brand. Furthermore, Microsoft needs to create a touch-friendly version of this product. It could be based on the version of Office being developed for Windows Phone 7 (WP7), and could be destined to run on Microsoft OS tablet devices -- which might also be based on WP7 technology. Beyond the Windows orbit, Microsoft should consider creating versions for Android, iPad, iPhone and the HP/Palm webOS. And the Office Web Apps story should align with this initiative.

If Microsoft did this, it could win the hearts and minds of bloggers and analysts, the loyalty of consumers and the interest of OEMs. This could help Redmond gain real momentum on the influencer front, where there have been few wins recently.

Would the new SOHO product cannibalize sales of the full Office suite? Perhaps, but I tend to think that it would instead preserve -- even enhance -- the Enterprise Agreement channel for Office Corporate. It might even shorten the deployment cycle for new versions in large enterprises, which is now as long as three years. Shorter deployment cycles would mean innovative new features like PowerPivot could provide value sooner, which would further preserve and enhance the franchise.

Just because a product has passed the quarter-century mark doesn't mean the romance must be over. Ask a couple celebrating a silver anniversary, and they might agree -- but they might also say you have to spice things up to keep it interesting. And that's good prescriptive guidance for Microsoft and Office.