Microsoft has put Google and Zoho firmly in its sights with the anouncement that it will ship a free Web-based version of its Office software which boasts half a billion customers worldwide. At its Worldwide Partners Conference in New Orleans, Microsoft said that the 400 million customers who are Windows Live consumers will have access to Office web applications at no cost.
Microsoft's business software division, which includes Office, made $9.3 billion profit on revenues of $14.3 billion in sales during the first three-quarters of its 2009 fiscal year. But the Web gambit will impact its established business model – and those of its millions of partners. But those partners were warned this week that nine out of 10 of their customers want to make at least a parital move to The Cloud and so they better get in line with the new world order if they don't want to lose out,
Get with the programme
"My business is changing. Your business must change as well," said Microsoft's business applications chief Stephen Elop frankly. “Every one one of us must build on the foundation that already exists. Every one one of us will succeed if they are thoughtful, deliberate, and focused on the areas where we will invest."
Users will be able to author Excel and PowerPoint documents simultaneously and for the same documents to be displayed on a PC, mobile phone, and in the browser while retaining the same formatting. Documents will be able to run the same in different browsers - although on mobile, they'll run "best" on Windows-based machines. "This is what we mean when we talk about the best productivity experience across the pone, PC and browser," said Elop.
“Office 2010 was designed to deliver the best productivity experience across the PC, mobile phone, and browser. We leverage what each of these devices does uniquely well, the power of our PCs, the mobility of our phones, and the ubiquity of the browser, all to deliver a complete productivity experience.
To enable this, we focused on three key areas. First, enabling people to use Office anywhere. We know that two-thirds of the world's population are online at least once per month, and here in the U.S., 89 percent of the top companies already offer telecommuting to their employees. So, providing work style flexibility has become a must have requirement for today's organizations. Office 2010 helps. Your documents will look the same all the way down to the formatting as you move across PCs, phones, and browsers.
“Second, we focused on enabling people to work better together. We know the flow of information is strong and continuing to grow. For example, according to Basics Research, on average workers receive 93 e-mails per day. With Office 2010 not only will it be easier to manage all of that e-mail, but you'll also be able to work better through real time collaboration on the same documents, and we're going to show you some of that. And third, we focused on enabling people to better bring their ideas to life, by easily expressing their creativity through the use of video and images.”
Muddled Microsoft
The move is being seen as a clear response to the challenge posed by the likes of Google and Zoho on the Web. “We have always considered Microsoft to be the one to beat,” commented Sridhar Vembu, CEO of Zoho. “ To paraphrase Bill Gates himself, we have always viewed both Zoho and Google as stealing Microsoft's customer base. After all, they own 90+% of the office market today, which is why we have always viewed the real competition (for both Zoho and Google) to be Microsoft.”
But Vembu claimed the announcement would do nothing to overcome Microsoft's essential problems with The Cloud. “What we see here is more evidence of Microsoft's strategic muddle: how far do they want to go with their online offerings?” he asked. “They clearly recognize the risk — almost $16 billion in revenue (and almost the same in gross profit) is involved here, one of the largest franchises of software. We do not believe the $16 billion in revenue/profit is defensible, but our guess is that Steve Ballmer does not want to be the CEO who gives that news to shareholders. Not when the other multi-billion franchise is also looking a bit wobbly.
“Therein lies the fundamental dilemma for Microsoft and the fundamental opportunity for players like Zoho. What are considered crown jewels on the desktop today will become features to be integrated into a variety of business applications, and not on fat clients, but on the web. That is how we see the mail & office suite evolving — they become so nicely componentized (and affordable!) that they get integrated into every business application. A lot of what we are working on at Zoho involves such integration effort, both within the Zoho suite as well as with a lot of partners. One word captures this process: commoditisation. Commoditisation of their core cash cows is what Microsoft fears most, yet, we believe it is utterly unavoidable. Today's announcement does nothing to address that basic fact.”
Coming to get you!
That obviously isn't Elop's view of the world. “An underlying theme has been that we are delivering the best productivity experiences across PCs, phones, and browsers, collectively a notion that is supported by Cloud Computing,” said Elop. “it's not surprising that our third big bet is our ongoing commitment to fully embrace software plus services. Customers value the power of choice, the power of choice to deploy their software on-premises, hosted by partners, or in the cloud, the power of choice to use a blend of rich client applications, applications on mobile devices, and browser-based applications.
Elop pointed to the firm's Microsoft Online Services Partner Program and pricing model as evidence of Microsoft's Cloud commitment. “Since launching the programme in the US 12 months ago, we have expanded to 18 additional countries,” he said. “ Each week, more than 100 [partners] sign up and join the Microsoft Online Services Partner Programme. To date we've enrolled over 5,000 partners, who most importantly have helped thousands of customers, including enterprise customers, adopt this technology, customers like GlaxoSmithKline, Philips, AP Moller Maersk, Aviva, Ingersoll Rand, and a number of others . The momentum is fantastic.”
Elop concluded with a clear warning shot across the bows for Google and Zoho. “Enabling online premise, or on-premises solutions for our customers, great differentiator and a great example of the power of choice that we're offering for our IT customers,'” he said, adding: “If I'm doing the math right, on day one when the Office Web Apps land, 400 million Windows Live users, 90 million annuity customers, close to a half billion people will have immediate access to the Office Web Applications.”
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