Microsoft Unveils Cloud Enabled Office 2010

Microsoft may have chosen to host its 12 May unveiling of Office 2010 and SharePoint 2010 on the set of Saturday Night Live, but the company is treating its latest releases as no laughing matter.

Although Microsoft holds the lion’s share of the productivity-software market, it faces the specter of cloud-based competition from the likes of Google, making its need to assert Office’s continued market-share dominance all the more pressing.

Office 2010 and SharePoint 2010 are now available to business customers; the consumer rollout of the software is scheduled for June. “Organisations are adjusting to the new economic realities,” Stephen Elop, president of Microsoft’s Business Division, told an audience of business customers, media and analysts. “Our customers are responding to a changing face of the workforce: the Millennial Generation, people who communicate in different ways.”

Office 2010 was also developed with an eye towards an increasingly mobile and home-based workplace, Elop added: “Our employees expect the same technologies at home as in the marketplace. They want all of those technologies to work very well and seamlessly together.”

Cost Savings And Productivity Gains

Elop also highlighted Office 2010’s supposed ability to “reduce costs” and impel “significant gains in productivity.”

As with Windows 7, Microsoft faces the challenge of convincing users that Office 2010 is worth the upgrade from older versions of the software. Unlike Windows 7, which succeeded the much-maligned Vista and the stable but increasingly aged Windows XP, Office 2010 follows a much more recent—and relatively uncontroversial—release. Hence Elop’s focus on highlighting “cost savings and productivity gains.”

According to Gartner, Microsoft held 94.23 percent of the productivity-software market in 2009, as measured by revenue. That represented a slight dip from 2007, when the company held 94.6 percent of the market. By contrast, Apple held 0.73 percent, followed by Google with 0.09 percent. The expectation, however, is that the continued growth of the cloud will translate directly into increased market-share for Google and whatever other companies arise to offer productivity software via a Web browser.

In a bid to counter Google Apps, Microsoft is offering stripped-down editions of OneNote, Excel, Word and PowerPoint, free and accessible to Windows Live subscribers via their browser.

However, because Microsoft needs Office to remain a profitable franchise, a number of features are restricted to the purchasable, desktop-based version.

Google responded to the Office 2010 release by offering a proposition of its own. “If you’re considering upgrading Office with office, we’d encourage you to consider an alternative: upgrading Office with Google Docs,” Matthew Glotzbach, Google enterprise product management director, wrote in an 11 May posting on the Official Google Enterprise Blog. “If you choose this path, upgrade means what it’s supposed to mean: effortless, affordable, and delivering on a remarkable increase in employee productivity.”

Google Docs offers an alternative to “end the endless cycle of ‘upgrades,’” Glotzbach wrote, adding that the only thing a business has to risk “is a server or two.”

A number of analysts see Google Docs as a potential long-term threat to Microsoft’s market-share, particularly in a business context. “I think we are likely to see a surprising number of folks look at Docs as the quick and easy way to get to features quickly during the Office 2010 upgrade cycle,” Rob Enderle, an analyst with the Enderle Group, wrote in an e-mail to eWEEK on 11 May, “because it will be vastly easier than getting budget approval and vastly faster than waiting for the rollout of Office 2010.”

Microsoft Could Bleed Market Share

Given how some firms can take years to fully upgrade to a new software platform, Enderle added, “Microsoft could actually bleed a significant amount of share on this upgrade cycle if they aren’t on top of this.”

Office 2010 could also see a slower uptake rate due to reduced business spending in the wake of a global recession. Although consumer spending on Microsoft products such as Windows 7 remains robust, businesses are still loosening their purse-strings for IT infrastructure; for the most recent quarter, Microsoft’s Business Division reported revenues that, while strong overall at $4.2 billion, were down year-over-year from the same quarter in 2009.

“This is indeed a moment of fundamental change,” Elop told the audience. For Office 2010, that will likely prove true in more ways than one.