Posted on 05/28/2008 5:27:37 AM PDT by Salo
The Fall of Microsoft Office By Anders Bylund (TMF Zahrim) May 27, 2008
On the same day that the state of New York published a report supporting open formats for electronic documents, mighty Microsoft (Nasdaq: MSFT) said that it would support the open-source ODF format in Office 2007. Redmond's own Open Office XML specification may be heading for the great Recycle Bin in the sky, never to come back.
What happened? The twin developments are noteworthy to astute investors for multiple rasons. While several European countries, the EU itself, and the state of Massachusetts have distanced themselves from proprietary document formats like Word's .doc text documents and Excel's .xls spreadsheets, the same scene looks much more dramatic from the lofty heights of the Empire State.
Across the continent, Mr. Softy rarely throws in the towel until he knows that he's been beaten. Just look at the measures the company is willing to take to stay in the online search fight, despite being thoroughly dominated by Google (Nasdaq: GOOG) and even Yahoo! (Nasdaq: YHOO). Redmond's hardly fond of wasting its resources, because the company has a pretty good track record in these extra-innings showdowns. But its winning streak only makes its surrender here that much more glaring, especially when the company's backing down on turf it actually created years ago.
Why is this a big deal? Office apps are big business for Microsoft. The Microsoft business division, where Office sales make up the bulk of the operation, provided $18.3 billion out of the company's $58 billion in sales in the past year. The business division also brought in $11.9 billion out of $20.8 billion in operating profit. If the golden Office goose leaves the building, Mr. Softy will be very sad indeed.
That's why Microsoft has been so keen to keep the inner workings of its file formats secret, so that upstarts like Corel (Nasdaq: CREL) WordPerfect or IBM's (NYSE: IBM) Lotus Office would never get the details quite right. It seems that the open-source ODF format, first spawned by Sun Microsystems (Nasdaq: JAVA) and popularized by the free OpenOffice.org office suite, has finally broken the camel's back.
To be sure, various legal challenges to the Microsoft monopoly also helped, and perhaps some other third-party specification would have received this newfound support if ODF wasn't there. The antitrust departments domestically and abroad might have played a large part in forcing Microsoft's hand here. In the end, this can't be good for Microsoft's ego -- or its business.
It's a new world, baby Most of the Office alternatives that support ODF files today have a serious price advantage over Microsoft's products (you can't beat free). And while their support for true-blue Microft-generated files is good, it's not perfect. In that light, you can understand why there must have been a lot of hair-pulling and tooth-gnashing -- maybe even some chair-throwing -- in Redmond before Microsoft made this difficult decision.
When creating business documents in Google Docs, ZoHo, or OpenOffice and sharing them with users of vanilla MS Office becomes both simple and a guaranteed success, there will be much less reason for users to cling to proprietary, locked-in formats. After that, users and IT managers can choose alternative office suites without alienating the regular Office users of the world, and Microsoft will have to protect its cash cow through excellent support, great design, and useful new features, rather than just guarding the well-worn standard upgrade path.
I can't say that Google or Sun or anybody else just won a bigger share of the office software market, and if they did, it won't help their revenue or profits directly anyway. But it's clear as day that Microsoft just took a serious hit, and the impact may take a long time to make itself felt but it will come.
The company's biggest revenue generator may be a shadow of its former self in a few years. I just hope that Microsoft has some alternative business prospects on tap -- and no, tackling Google's search hulk head-on doesn't count.
Pings.
I have used Google docs once or twice, mostly in a learning environment. No reason not to use them, i think, but I haven’t really exploited them as much as I would need to for work.
I really like MS Office products - even office 2k7, but Open Office is an excellent substitute once you turn off java.
That's why Microsoft has been so keen to keep the inner workings of its file formats secret, so that upstarts like Corel WordPerfect or IBM's (NYSE: IBM) Lotus Office would never get the details quite right.
Upstarts? WordPerfect? Is this guy just out of high school?
Maybe so, but the functionality of Calc, the OO speadsheet app, really exceeds Excel. Since a majority of what I do is analysis I use OO Calc exclusively.
Is it $400 worth of clunky?
The only thing that prevents me from using MSOffice 2000 is a viable alternative for Outlook that synchronizes with my Palm. Evolution in Ubuntu does, but is screws up the synchronization process and I get all kinds of duplicates.
Thunderbird/Lightning is a good application, but doesn’t offer synchronization. If-and-when it does, I’d switch in a heartbeat.
There. Fixed it!
That made me LOL as well.
I was using WordPerfect in 1987 and WordStar before that. I never used Microsoft Word until I was 'gifted' a copy with my first home PC in 1981.
Office 2000 marked the highlight of MS Office, IMO. After that, all MS office products became “cartoonish”, slow and bloatware.
The only Office product since that time that is worth it’s salt, and can stand on it’s own merit, is OneNote.
I don’t mind paying for a product that represents a value to me, but I do demand service for it. Going online and spending my time seeking how to do something that was trivial in 2000, is not my idea of service or support.
We used Lotus Symphony at work until Windows came along. Then WordPerfect became the accepted editor. Lotus 123 was the spreadsheet application and Paradox was the database application. I remember a lot of bemoaning the absence of an ‘integrated’ suite at the time. These applicatons lost their supremacy because of Microsoft integration.
I get what he's saying but that phrasing still strikes me as funny.
Office isn’t going anywhere, it’s still the #1 selling piece of software for Macs and you’d love to have it on Linux.
“Office isn’t going anywhere, it’s still the #1 selling piece of software for Macs and you’d love to have it on Linux.”
You have nailed it. Business is about money.
The major cost is employee training, not software purchases. As soon as Office will run on Linux, there will be an exodus from Windows based machines.
In my semi-informed opinion, the recent increase in Mac sales is based on the availability of Office on Macs. It’s not the operating system. Most employees know nothing of the operating system. They just turn on the computer and hit the Word or Outlook icon.
Of course, Gates knows this and may not be in a hurry to release a Linux version.
IIRC, Microsoft learned the closed file format game from WordPerfect when Word was the upstart.
This is outstanding news. I have spent the last two hours cleaning up HTML produced by someone using Word. MS Office is the biggest piece of $hit software ever produced. Ever. If Bill Gates was standing in front of me this morning, I would have put him in the hospital. I f#%&ing hate Microsoft. Nuke Redmond.
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