Microsoft's new Office suite may be a gamble

Dom

This week, Microsoft Corp. gave its business customers an incentive to upgrade their Office suite to the 2003 version, set for release in October.

Well, the company calls it an incentive. It may actually be more of a bribe.

Microsoft chief executive officer Steve Ballmer, the company's marketing man, is moving Office in a dramatically new direction. It is no longer a simple suite (Word, Excel, Outlook, PowerPoint and sometimes Access), but an expanding toolbox for moving an entire enterprise over to e-business.

Originally set to be released this summer, Office was delayed a few months by a last-minute decision to restrict some of the Extensible Markup Language (XML) tools, the core of the new product, to a Professional version, leaving a Standard edition with the routine upgrades.

XML is a language whose primary purpose is to create applications that display live data sitting on the corporate server. It's sprinkled throughout the new Office, and is embedded in new tools such as InfoPath (for creating on-line forms), One Note (a sticky-note program on steroids) and a major remake of Microsoft Outlook (including a business contact manager and a terrific junk-mail filter). Front Page, the standby tool for Web-page creation for people who don't want to be overly challenged, is being made over into a tool for creating Web sites using XML.

This kind of Office is going to require a real commitment by buyers.

That's why Microsoft is sweetening the changeover. The Redmond, Wash.-based giant said on Monday that its volume-licence customers will be able to upgrade their Office XP Standard Edition to Office 2003 Professional Edition at no extra cost. Office Standard users who wish to upgrade to the full Professional Edition can do so simply by paying the price difference.

It's more complicated than that. But rather than trying to untangle this Gordian knot of pricing schemes, let Microsoft explain it on its licence page: http://www.microsoft.com/licensing. In the meantime, it's instructive to look at the company's marketing rationale, and at another bit of news that came from the Word Wide Web Consortium (W3C).

Microsoft says it started differentiating Office Professional from Standard after customers expressed more interest in the Standard Edition, which will not contain all the major XML features. Dan Leach, lead product manager for Information Worker Product Management, said the people asking for the Standard version may not know it, but they "may want those new features in Office Professional," which is why the company introduced the incentive pricing.

It's telling that Microsoft is still calling XML technology, which makes Office 2003 revolutionary, a "feature."

XML is much more than a feature -- it's a powerful, sophisticated tool. It has been designed to integrate Office with the business software offered by Microsoft Business Solutions, created in 2002 with the $2.6-billion (U.S.) purchase of e-business tool makers Great Plains Software Inc. and Navision A/S of Denmark. Because of this power, Office Pro, with XML, would be difficult to deploy throughout an entire enterprise, most of whose employees would never need to use such powerful software, or even be allowed to.

Meanwhile, the W3C, whose job it is to define industry standards, on Friday issued its recommendation for Web forms, called XForms 1.0, which uses XML. The technology is much more flexible than the current HTML language, allowing users to integrate live data (XML) with more static Web pages (HTML).

The W3C group is being supported by big players such as IBM Corp. and Novell Inc., but without Microsoft, which has its own XML-based forms technology, InfoPath (formerly known as Xdocs), embedded in Office 2003.

The disagreement between Microsoft and the W3C group is about standards; but there is no disagreement about the idea of XML forms. All the big names are on the bandwagon.

But even if industry support for XML forms is broad, the W3C has been slow in issuing its standards proposal. It was to have been released in March, and the delay was officially blamed on bickering between Microsoft and the others. But the real reason for the delay, one industry analyst said, was because of "market and vendor apathy."

"Not much is happening with regards to adoption of XForms," ZapThink analyst Ron Schmelzer told CNET News this week. "As a result, without any real pressure to develop and release products, there is little motivation to speed the spec through the lengthy W3C process. . . . It will take some serious interest by vendors and/or end-user customers to make things happen more expediently."

In short, the business world is not exactly beating a path to the Next Big Thing even if the big players say it's the only way to go.

These two factors -- that the sophisticated tools of Office 2003 Pro are needed by only a small team within any given enterprise, and that there is lack of demand for them anyway -- suggest that Microsoft is not just trying to grease the wheels of buyers for Office 2003 Pro, but that it is getting genuinely worried about the XML-enabled product moving at all.

Office has always been Microsoft's core product and the source of most of its profits -- even more than Windows. If the market is not terribly interested in XML tools, then Office 2003 Pro represents a major gamble for Microsoft.

If sales stumble in October, Microsoft can always blame current market conditions. But now, with the new incentives in place, blaming a poor economy will look more like an excuse than a reason.

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Source: GlobeTech