
Microsoft has released the next version of the venerable Office suite, Office 2010, and companion products Sharepoint 2010 and Visio 2010 (is Sharepoint really an Office companion product? I'll explain that in a minute) today to
business customers worldwide.
It's getting harder and harder for Microsoft to make Office launches into a big deal. Office 2010 is basically Office 2007, which was basically Office 2003, each iteration dressed up with a few whiz-bang features that do little or nothing for (and sometimes work directly against) the core functionality that people look for in the package: typing documents and making spreadsheets. While the new features are not universally worthless, they are increasingly disproportionate to the value of the package as a whole.
The whiz-bang this time is Office Web Apps, a free online version of the most popular Office applications: Word, Excel, and Powerpoint.
While I like the strategy the company has adopted for dealing with the advent of cloud computing, I'm not sure I like the results. I think the Software+Service mantra they have chosen to tie existing cash-cow products to various online solutions is a good way to go from their perspective, in that it provides a leash on revenues while giving customers enough taste of the flexibility and power of utility computing to keep them from jumping ship. They are not, however, helping anyone realize any of the significant cost savings that should be possible in the utility computing model, which considering the girth of the company in the marketplace, may simply serve to give the model a bad name. I doubt that anyone in Redmond would shed any tears if that were to happen.
While integration and compatibility are good things, of late Microsoft has been using those desirable elements to create an undesirable one, dependency. This is where Sharepoint as an Office component comes in. Sharepoint has always had strong ties ties to Office, but originally, it was positioned as a sort of easy-to-use, shake-and-bake corporate intranet product. It's pretty effective in that role, and flexible enough to meet most business needs out of the box. But needing a quick response to Google's suddenly popular Apps online-office package ("need" is too strong a word; nonetheless, the company apparently felt a threat from that direction and responded accordingly), Sharepoint was pressed into service as the de facto "cloud" document store for the various online versions of Office. This, again, is not a bad move for Microsoft to make, but again, it fails to showcase the potential flexibility of utility computing.
Office Web Apps are similarly constrained. While they are free, you don't get the full functionality unless you are also using them with Office 2010 on the desktop... with all the attendant costs and constraints that brings to the table. At this point, it's silly to use them otherwise; if you own the full version, you may as well use it instead (if you need access from anywhere, just store them in Sharepoint!) and if you don't, you are better off picking another product which doesn't have the explicit goal of maneuvering you into buying the full package.
Microsoft has intelligently structured the Office game in recent years to effectively prevent customers from considering these factors and to keep adoption rates high. A recent Forrester survey, cited in the link at the top of this post, names some astounding ROI numbers for the Office package, numbers that I would not dispute; compare Office to your average Smith-Corona and see what wins. But the same survey helps illustrate how exactly the game is rigged. The comparison is made in a vacuum, one of Microsoft's own creation. It's not being made against other alternatives... and the Forrester data suggests why that is.
More than half of respondents planning to upgrade to 2010 are not doing so because it's better, or because they've evaluated it in any meaningful way against alternatives; they're doing so simply because their licensing terms allow it. It's a human impulse, after all. "Hey, I can get this for free!" It's not free, of course; you paid for it once and will do so again, but the adoption is severed from the payment by terms of contract, which makes it intentionally difficult to associate the two events, and particularly difficult to get out of the cycle. It's the same reason any sort of recurring billing is a hit revenue model. The customer pays before he realizes it, then decides since the product is already paid for to go ahead and use it.
Those familiar with the "business as conflict" school of thought will recognize that this scenario puts the company inside your OODA loop, a bad place to allow an adversary. You may question whether or not Microsoft is an adversary, but putting all the feel-good partnership language aside, when someone is trying to take money out of your pocket without being entirely up front about the exchange, that puts them on the other team in my book.