Office 2010 refresh cycle opens window for competition

A good proportion of existing Office users will move to Microsoft's new release, but the competition may want to get a leg in while companies are deliberating, say analysts.
Written by Victoria Ho, Contributor

Microsoft can expect a good proportion of existing Office users to upgrade to the latest Office 2010 release, but this is a good window for the competition to pose alternatives as companies consider refreshes, say analysts.

The software giant has released its Office 2010 productivity suite, and along with it a number of new features and Web capabilities.

But analysts say the well-timed release of Office 2010 with companies looking to upgrade from Windows XP--and Office 2003, correspondingly--will be the deciding factor for uptake of the new, 14th release of the Office product.

In a phone interview with ZDNet Asia, Tim Sheedy, Forrester senior analyst, said: "The decision to move to Office 2010 will be part of [corporate] refreshes to Windows 7, as they move off XP."

With the majority of large companies still on XP and waiting to move to Windows 7, Microsoft can expect a big Office 2010 uptake when these firms refresh their OSes, Sheedy said.

Another factor he pointed out for companies moving to Office 2010 is the need to protect their existing backend investments and software assets based on legacy Office products. This includes documents and Microsoft Exchange mail servers making it "hard to move off the Microsoft family", he said.

That said, Jens Butler, Ovum principal analyst, told ZDNet Asia in an e-mail interview that most updates will be rooted in a need to upgrade, rather than as a result of the new features Microsoft has put into the product.

Both analysts noted that Microsoft has added much new functionality and features for power users, but stated that most companies are considering the move now because of refresh cycles.

Butler said this window also provides the competition, such as open source OpenOffice.org and Web suites, Google Docs and Zoho, a chance to get a foot in the door.

"It is an increasingly competitive market and buyers are becoming more savvy around the value associated with their environments and the supporting services being offered. Office 2010 may not be a guaranteed upgrade," he said.

This, however, is dependent on different business cases for companies, where there may be substantial savings on licensing fees, he added.

Collaboration needs retraining
Still, Microsoft's hooks in organizations go deeper than that, Sheedy pointed out. The company has focused on integrating the different elements of Office 2010, such as SharePoint and Exchange, which present a "powerful, end-to-end" package for document collaboration when combined, he said.

Microsoft general manager, information worker business group lead for Asia-Pacific, Mike Tuohy, emphasized productivity gains that companies can reap as a result of collaboration.

In an interview with ZDNet Asia on Wednesday for the launch of Office 2010, Tuohy said this was a focus in the company's development of Office, from smaller features such as e-mail consolidation to broader integration within the Office family such as co-authoring of Word documents.

He quoted a study done by Forrester, estimating that companies will achieve return on investment on Office within a year. Another figure from the study translated the average productivity gain to two work weeks per year of time saved.

However, Sheedy said that companies eyeing this productivity boost will have to invest in retraining to bring about the cultural change necessary to take advantage of these new features.

He explained that the goal of having multiple people working on a document together is easily defeated by people sticking to the habit of attaching a document to an e-mail.

"It's a different way of thinking. Companies [that] don't change won't see the gains," said Sheedy.

Competition getting cloudy
Piggybacking off the Office 2010 launch, Google posted a blog post persuading customers to choose its cloud-based office productivity offering instead.

The company has also been outspoken on Microsoft as competition; Dave Girouard, Google enterprise president, said in a CNET News interview that much of Microsoft's online offerings is dependent on companies running existing Microsoft software on the backend, as well as signing up for desktop deployments.

Perhaps in response to the cloud competition, Microsoft has stepped up its online capabilities in Office 2010. Starting tomorrow, it is offering free versions of its Microsoft Word, Excel and PowerPoint products under the Office Web Apps banner.

It also teamed up with Facebook to announce Docs.com in April, a platform allowing users to log into a Microsoft platform with their Facebook identities and share documents. The service is currently in beta.

The Redmond company is additionally offering SharePoint in a hosted service and the option for companies to host behind their firewalls. A slimmer, online version of SharePoint is already accessible through the company's Business Productivity Online Suite (BPOS), but the update in 2010 achieves closer feature parity compared with Microsoft's on-premise version.

Butler said the cloud push from Microsoft can be "partially" attributed to the encroaching competition, but noted an overall market move toward the cloud. User expectations of companies being able to provide online versions have also been raised, he said.

Tuohy provided recent Forrester data which showed that 81 percent of enterprises surveyed were running Office 2007, with 78 percent using SharePoint, and 4 percent on Google Apps.

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