tag:,2009:/1/tag:72.47.210.69,2007://1.3460- 2009-10-30T14:51:47Z Comments for How Will Microsoft Respond To Online Office Threat Movable Type 4.23-en tag:72.47.210.69,2007://1.3460 2007-01-30T08:13:03Z 2007-12-16T23:10:59Z How Will Microsoft Respond To Online Office Threat Written by Jay Fortner and edited by Richard MacManus With the consumer release today of Microsoft Office 2007, it's a good time to look at the online office space - and what, if anything, Microsoft will do to address this growing market. In 2007 we expect to see good progress in the adoption of Internet-based... Richard MacManus http://www.readwriteweb.com Written by Jay Fortner and edited by Richard MacManus

With the consumer release today of Microsoft Office 2007, it's a good time to look at the online office space - and what, if anything, Microsoft will do to address this growing market.

In 2007 we expect to see good progress in the adoption of Internet-based productivity applications, such as Google Docs & Spreadsheets and Zimbra. At this point, the 'Web Office' space is in its infancy - but the market is maturing quickly. Already online suites such as those offered by Thinkfree and Zoho are starting to get some traction as cheaper, hosted alternatives to the Microsoft Office desktop suite of products. Online office services are usually free, you can easily share and edit with others, and you can access them from anywhere with an internet connection. But still, people will have to get over security and server concerns; as well as interface and usability differences.

Perhaps the real question here is: what will Microsoft do to defend its office software turf from online office services? We know they are keeping close tabs on online office products. For example in August 2006, Microsoft listed ThinkFree (a web-based word processing and spreadsheet program company) as one of its competitors in its annual 10-K filing.

To help frame the question of how Microsoft will respond to Web-based office software, here is a SWOT analysis of where Microsoft is, where it could be, and some things it could consider looking at - in 2007 and beyond.

]]> Microsoft's strengths
  • Large amounts of capital and available resources that dwarfs competitors (except for Google)
  • MS is the established leader for office software, with significant mainstream brand equity
  • Large and very significant influence over partners and complementary suppliers
  • Interoperability amongst office products and ancillary lines of business
  • MS appeals to corporations and large institutions
  • It has yet to be proven that free Internet-based Office products can survive, when currently little revenue is generated

Microsoft's weaknesses

  • Not free and in fact can be very expensive for a small business, non-profit, or emerging market
  • No easy-to-use collaboration tools that rival the leaders in the Online office space
  • Web-based delivery is not a core competency. MS would potentially need to reorganize operation.

Opportunities in the online office space

  • Offer exactly what the Online office leaders offer, and leverage their desktop market share monopoly. This is equivalent to Blockbuster offering both an online and bricks and mortar offering.
  • Offer a low cost, bare bones online option for individuals and small businesses; and eventually up-sell. This may be their intention with Microsoft Works Online (see below).

Threats that could erode Microsoft's market share

  • Competitors such as Google, Zoho, and AjaxWriter could build critical mass through the installed base of former Microsoft users. Obviously Google is by far the biggest threat here.
  • Fragmentation of the office software market could severely hurt Microsoft's stock price.
  • If Google puts it all together and provides a compelling online office suite, then it has the brand equity to really damage Microsoft's main revenue source.

How is Microsoft responding to the threats?

  • In September 2006, BusinessWeek reported that Microsoft "is developing a strategy to put some of the technology from its Works software - the barebones word-processing and spreadsheet program that often ships with new consumer PCs - at the heart of a new online offering".
  • Within a month of Google's Docs & Spreadsheets release, Bill Gates was telling the Financial Times that "Microsoft would itself match services such as those offered by Google" - although he still claimed that online tools would only ever represent "a small part of the market."

Options available to Microsoft to protect its turf

1) Offer comparable MS online office products, using free ad based and/or subscription business models (may cannibalize existing strategy and core competency).

2) Blur the line between online and offline apps in the existing Microsoft Office desktop suite (appears to be where they're headed)

3) Buy the online competition (ThinkFree, Zoho, et al)

4) Block any interoperability between online office competitors and MSOffice (isn't that how they usually play ball?)

5) Continue with current business model and ignore the competition (not wise, in our opinion)

It could also be a combination of these strategies - and more. Please add other options that Microsoft has, in the comments section.

]]> tag:72.47.210.69,2007://1.3460-comment:28605 Comment from Steve Pohlit on 2007-01-30 Steve Pohlit http://www.stevereports.com In the past three months I recommended free versions of Office competing software to two separate clients. In one case, the owner of a company in the construction industry had purchased a new laptop and needed many of the typical "Office Suite" products. I acquired a disk from openoffice.org for $7.00 since I had a little trouble with the on line download. Once installed we tested it with many of the Word and Excel files generated during the project and all worked very well - no problems at all.

Another client is operating on its' own in-house server and is in the process of upgrading its network in connection with the purchase of a new industry specific software application. They are running Window 2000 in-house and will need to upgrade user applications. Again I recommended looking at openoffice.org In this case the in-house person with some technology experience found no specific reason to not consider openoffice.org but concluded to stay with Microsoft because their reputation gave him a higher level of comfort. I recommended installing it on a test basis but that is still an open item.

Microsoft cannot buy all competitors that are popping up and looking at the history of technology development would be wise to have a suite that competes with FREE for FREE FAST.

Steve Pohlit, Business Development Consultant
wwww.asktheconsultant.biz

]]> 2007-01-30T10:36:43Z tag:72.47.210.69,2007://1.3460-comment:28606 Comment from Mikael Bergkvist on 2007-01-30 Mikael Bergkvist http://xinteleport.blogspot.com As soon as people realise that html and word (*doc) are interchangable, the downfall will start.
You can open *.html in word and save as *.doc, open *.doc and save as *.html without problems.
Why bother with using anything but html under those circumstances?

]]> 2007-01-30T13:48:43Z tag:72.47.210.69,2007://1.3460-comment:28607 Comment from innerdaemon on 2007-01-30 innerdaemon http://innerdaemon.wordpress.com Couple of additions:
Weakness
Less influence. Somewhere along the way, Microsoft lost its ability to influence and take advantage of its strengths. It is playing catchup in all areas and partners and customers alike tune out to Microsoft marketing.

Opportunities
The 85% penetration in the SMB market means that Microsoft can effectively tie all its desktop offerings to be online all the time and allow firms to choose between desktop, web, or hybrid.

]]> 2007-01-30T13:52:36Z tag:72.47.210.69,2007://1.3460-comment:28608 Comment from Stephane Rodriguez on 2007-01-30 Stephane Rodriguez
The biggest to one of the two Microsoft's cash cow is itself.

Actually, with office 2007, the entire platform is falling under itself because of the weight.

One would seriously want to question whether to do collaboration, BI and file sharing on top of Microsoft mega bloatware, or start from scratch with cheap alternatives (see Nick Carr's 10$/year IT post).

As for corporate people wary about putting their stuff online, you have got to ask yourself whether that's really a problem when you know that 1) vendors can provide intranet versions of those online products 2) service level agreements may include security, back up and the whole enchilada.

Technically speaking, three more things to say :
1) Microsoft can't compete with small and fast vendors out there. See the rate at which Zoho is shipping products. Microsoft is in 3-year cycles.
2) Microsoft Office live is already ridiculed by Google Apps domain, and Google has yet to integrate some of the vendors they acquired lately (Jotspot comes to mind).
3) Microsoft's new file formats are breaking compatibility with existing versions, thus causing budgeting. As for the file formats themselves, they are just the old ones surrounded by angle brackets. It's so bad, so lame, that Microsoft had to resort to buying their way into ECMA fast-track (and now ISO fast-track, even though this might not work as planned here).

]]> 2007-01-30T14:14:38Z tag:72.47.210.69,2007://1.3460-comment:28609 Comment from Matt on 2007-01-30 Matt http://www.navantis.com DISCLOSURE: As a Microsoft partner I can tell you that we are not tuning out Microsoft's Marketing hype. These internet applications are in the crest of illusionment. In time, as more companies flood this market, we will see applications consolidated against the bigco's - as they have always been in the past.

I see this as three fold:

1) Personal User

Provide little revenue to Microsoft for these products (EX// students go to their computer lab to write essay). Open standards mean that these users may use an online version of word and electronically submit it to say their professor in a digitally standard format - These people may switch to Online apps for costs - but will still be required to know Microsoft Office for their entry level job. These users may also be able to use online products to complete work not completed at the office – NOTE: this assumes data is portable.

2) Enterprise User

Further, as an Enterprise Architect Programmer I can say that the big corporations in the great white north would never use any of these online offerings. Nor would they switch from Office 97 / 2003 / XP to Open Office when they could switch to the far more robust and pre-Integrated Office 2007 System. Cost isn’t as much of an issue as people think – especially when a desired level of support is provided at no cost when you merely purchase a license. If you don’t make money your business will fail regardless of what Office Suite you are using.

2) Business User

Sure, the little fish that have tiny back offices can use open office or some online office suite to collaborate. When a company grows over a certain size they need custom analytics. This does not seem possible with any of these online office suites. Hence, they will have to pump more $$ into purchasing MS Office and training employees at a later date should they reach that scale.


Why Do Companies Use These Suites:

The integration of knowledge is why companies use these technologies. They use these as ‚Äúbusiness platforms‚Ä?: to perform, communicate and action deliverables. In most cases, these online office suites cannot be integrated into proprietary corporate data marts - which means there is little value to any serious business and in-fact - going 100% online would effectively constrain the usefulness of their own data in any analysis and cost the company Time that would offset any cost savings up front. Training is a huge issue for BigCo's employing non-techie "Old" "Slow" people. This cost alone would offset any cost synergy of moving to online / open office applications.


Microsoft Could Give It Away:

Another thing that Microsoft could do is offer it's Office Suite for free (in the same manner all the others are doing). If they did this for one year they could start charging again for add-on services, and effectively destroy any traction these "online" or "skunk ware" copies of their products are gaining. Everyone knows that the services are where the value is. Office 2007 really is an amazing application suite, if you post a comment on here and have not used it … well … I wish you didn’t post …


Hostage to Network Connectivity:

I agree about open formats, but how do people here feel about having all of their office documents stored online. What would happen if their network router crashed, would this mean that all operations would cease? I see tons of logistical nightmares for early adopters in these spaces. I would never recommend a client go to any of these online office suites.

Is this the right time for this Conversation:

Sometimes companies enter new markets with great ideas too early and fall flat on their face when they realize they can’t make money off them. If anyone knows, could they please post a list of sizable companies that use any of these ONLINE technologies?

Microsoft Office Live

Microsoft truly believes that Vista will compel people back to the desktop. Their new lines‚Äô of Stand-Alone software are amazing from many perspectives (use, automation etc.). Microsoft has every intention of getting users back onto the desktop ‚Äì and to be frank ‚Äì this is the reason their online portal sucks. Microsoft‚Äôs product assortment dwarf‚Äôs anything Google has, so I‚Äôm not sure how we‚Äôve got to comparing Apples to Oranges. Google has always been a website, now they are getting their fingers dirty and are having as many if not more problems with security flaws etc. than Microsoft had when it was that ‚Äúsimple and mature‚Ä?? The only difference is, in Google‚Äôs case it seems with such an external facing integrated architecture, that it‚Äôs just a matter of time until all of, ALL OF our information will be compromised (if it hasn‚Äôt already happened in secret). Thank god Google made the back button work in my AJAX app ‚Äì because other than their strategy taxed search ‚Äì they do very little for me as a software company (EX// imagine the blowback of a Microsoft App being installed in the same manner as Google Desktop Search ‚Ķ argh).

Cheers,

Matt

]]> 2007-01-30T18:02:23Z tag:72.47.210.69,2007://1.3460-comment:28610 Comment from pramit on 2007-01-30 pramit http://mediavidea.blogspot.com Microsoft is carrying too much of PC-era baggage to make it in the online arena. For example, as I type most probably Google Toolbar or something is pointing wrong spelling and offering correct ones on the fly. Unlike MS word, it is free.

]]> 2007-01-31T04:05:22Z tag:72.47.210.69,2007://1.3460-comment:28611 Comment from TanNg on 2007-01-31 TanNg Suggestion that MS should response to online office suite with online office suite is fundamentally wrong.

Online office suit is reflect some customer needs: easy online collaboration, access document every where, etc... So what MS should do is response to CUSTOMER needs in an unique way, trying to understand the reason why people use online suite and coming out with product that satisfied these reasons, not response to competitors actions.

]]> 2007-01-31T08:56:32Z tag:72.47.210.69,2007://1.3460-comment:28612 Comment from Rahul Roy-Chowdhury on 2007-01-31 Rahul Roy-Chowdhury http://developinginnovation.com The rise of online office tools just reflects a segmentation of the market based on usage patterns. It never made any sense that all users of word processing software or spreadsheets essentially had just one price point to pick from. Users with fairly basic needs will migrate online, and power users will remain with MSFT for a long time to come. I don't think MSFT should cannibalize its market - build more powerful features, charge more, and give up on the piece of the market that is satisfied with basic functionality.

This will also signal to Google et al that a duopoly is possible and will make it less likely that they would aggressively go after high-end users of MS Office.

]]> 2007-02-01T00:30:23Z tag:72.47.210.69,2007://1.3460-comment:28613 Comment from Steve Kohler on 2007-02-01 Steve Kohler http://www.iwoorx.com I think that another important and related question is
"why do you need a suite"?

Application switching is disorienting and time-wasting.
Most of the time people need to share a document/spreadsheet/presentation. The sharing needs to be enabled and fast. Right now, the user spends too much time on the authoring end due to app bloat of the suite architecture.

Maybe time for a re-think?

]]> 2007-02-01T22:12:57Z