Microsoft users question continuing Office romance

Is the new version of Microsoft Office a breakthrough in desktop applications or a package stuffed with more features than can be justified?

As Microsoft employees demonstrated the new client and server side office productivity tools at the official launch in London in October 2003, this question played increasingly on the minds of assembled IT buyers.

‘Office System’ contains no fewer than 11 products, six suites and four servers. The most substantial changes from Office XP – the previous version of the software – include new XML-based applications based around collaborative working and new rights-management functions that give users control over who can open, forward or print certain documents.

While the new features are clearly designed to encourage users to upgrade – as well as to acquire more Microsoft products – the irony is that the plethora of functions may deter some from buying it, say critics.

In the past, most Office users have tended to wait for the arrival of the first ‘service pack’ – a collection of bug fixes that Microsoft periodically releases – before upgrading. That has delayed purchases by up to 18 months. Such is the sophistication of Office System that bug fixes may be longer in coming, they say.

Yet Microsoft will not be over too concerned, for two main reasons.

First, many users are already certain to adopt the new software after Microsoft pushed them into new licensing plans in 2002 that lock them into receiving periodic upgrades.

Second, users will not stay with their present versions forever. In mid-January 2004, for example, Microsoft will end support for Office 97.

The company says it will continue to provide fixes for critical security holes, but it has not said for how long. Gartner analyst Michael Silver expects this to continue only “through 2004”. “Enterprises must decide how long they can accept the risk of running an unsupported version of Office,” he says.

Organisations running Office 2000 will have only two more years of extended support before they will also be compelled by Microsoft to upgrade – or run the software without support.

Microsoft, for its part, will spend $150 million on marketing to persuade people to continue buying its most profitable product.

The various versions of Office have about 400 million users and generated $9.2 billion in sales in the company’s 2003 financial year. Operating profits from its business software division were some $7 billion, which represents a 76% gross profit margin, an awesome figure even for the software industry.

With numbers like that to defend, Microsoft knows it must do something dramatic to encourage customers to upgrade. But whether those users choose the carrot of extra features and functions, or end up being hit with the stick of de-support, remains to be seen.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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