Users gravitating to lower-priced Office SKUs

While more and more users are choosing "premium" versions of Windows, the opposite is happening with Office, Microsoft's other cash cow.

While more and more users are choosing "premium" versions of Windows, the opposite is happening with Office, Microsoft's other cash cow.

Stephen Elop, the head of Microsoft's Business Division, told attendees of Microsoft's annual Financial Analyst Meeting (FAM) in Redmond on July 24, acknowledged that more and more users are choosing lower-priced Office versions -- like the Office Home & Student -- rather than premium variants of the product.

(Microsoft recently introduced a new Office subscription bundle, called Equipt, that is built around a lower-priced SKU of Office and is seen by many Microsoft watchers as an attempt by Microsoft to blunt the impact of Google Docs on its business.)

Elop said that Office 2007 deployments are slightly outpacing Office 2003 ones (measured at similar points in time). He said Microsoft believes over 90 percent of businesses will have deployed Office 2007 as of summer 2009.

Update: Elop said Microsoft has sold 120 million copies of Office 2007 since launch, I see in the transcript of his remarks from FAM.

The Microsoft Business Division isn't completely dependent on Office for growth, however. Elop said that Microsoft has a handful of billion-dollar and potential-billion-dollar businesses in the hopper. Some of the stats he cited:

On the Windows side of the house, Microsoft is playing a lot of attention to the high end of the Windows client market, as that is where Microsoft is competing most directly with Apple. But there are some significant market-growth shifts happening that ensure that Microsoft won't be focusing exclusively on the premium market with Windows.

Microsoft Chief Operating Officer Kevin Turner told the analysts and press attending FAM that an increasing percentage of Microsoft's PC growth is coming from outside the U.S. In fiscal 2008, 62 percent of PC consumption was attributable to "mature" countries and 38 percent to "emerging market" ones, Turner said.

But U.S. share is contining to shrink, despite the fact that the U.S. is moving from a one-PC-per-person to a multiple-device-per-person model. Asia and Africa are becoming increasingly key, both from a PC sales standpoint and a technology-assistant standpoint, Turner said.

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