Microsoft Office 2010: The Odyssey Continues

Forrester
July 16, 2009

Sheri-McLeish by Sheri McLeish

Sequels never can match the thrill of the original. But the good ones offer a compelling story of their own, develop familiar characters, and introduce something new and exciting. Last week Microsoft gave developers a backstage pass to preview Office 2010, due out in the first half of next year. The drama unfolds with Microsoft and Google waging a multi-front war with each other in search, browsers, productivity tools, and, soon, operating systems. Glimpses of the fourteenth iteration of Office reveal Web-based lightweight apps along with capabilities geared at improving collaboration, multimedia content development, and email management.

Can Office 2010 save the franchise? Or will a simpler, better customer experience from Google draw in a bigger audience before next summer? And what does it mean for the bit players, independents, and sleepers like the Open Office suites from IBM/Lotus, Novell, and Sun, or for Adobe, Zoho, Thinkfree, Corel … that’s a lot of competition for a sluggish software market that Forrester sees as being down by 5% or more for the year.  The glimmer of hope for software vendors will likely come from subscriptions revenue for software-as-a-service (SaaS) products in 2010, which Forrester projects to grow by 7.5%.

Microsoft wants to lead that growing SaaS market. For enterprises, what’s notable about the Office 2010 story is that Office Web apps can be on-premise or hosted. The lightweight Web browser versions of Word, PowerPoint, Excel and OneNote will be free for consumers through Windows Live. Pow! But the bigger deal for enterprises is the option to host Office Web apps on-premises as annuity customers as well as via a hosted subscription through Microsoft Online Services. This option isn’t offered by Google today and, for the moment, may be what makes Office Web apps a hit in the enterprise.

To date, Microsoft’s dominance in large businesses remains mostly intact, with 57% of firms running Office 2007 and 80% supporting some version of Office.  Combined, the alternatives make up less than 8% of the enterprise market, according to Forrester’s March 2009 North America, Europe, And Asia Pacific Desktop Innovation Online Survey. And of those Forrester surveyed, 78% said they have no plans to look for an alternative to Microsoft Office. Real barriers remain for alternatives, from concerns about content control and security, sunk license costs, and online/offline issues for Web-based tools to fear of rejection by business users. Like it, love it, or not, people have a comfortable, familiar relationship with the Office apps. And that’s a critical edge Microsoft must maintain.

Technology Populism is fueling the collaboration and mobile collaboration markets and blurring the lines between work/life boundaries.  The influence of consumer experience can be equally powerful if harnessed by Google for email and productivity. Most enterprise IT departments rely on the feedback of their business users to measure the value of their productivity tools. Forrester data also shows upgrades generally driven by business demands (34%), because current tools are no longer supported (24%), are no longer compatible (16%), or because the culture demands it (15%). By promoting free access to Web-based tools, Microsoft seeks the sway of the public. Office 2000 ends support this month; Microsoft needs to get those firms on board with 2010 somehow. What will your firm do? What are your barriers to upgrading Office or moving to an alternative? Now is a good time to clarify your firm’s strategy, because 2010 looks like it could be a blockbuster year for buyers prepared to negotiate.

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