The Way Business Is Moving published by
Issue Date: January 2009

Microsoft to move office to the cloud

1 January 2009
Richard Edwards, Butler Group analyst

With the announcement of Office 14 for the Web at its recent Professional Developer Conference in Los Angeles, Microsoft has fired a salvo across the bows of Adobe, Google, Zoho, and other desktop-apps wannabes, as it plans to offer users familiar tools that will allow them to create, edit, and collaborate online.
Office web applications are lightweight, cross-platform, cross-browser, web-based versions of Word, Excel, PowerPoint, and OneNote, and are intended to share the same general look and feel of their traditional desktop counterparts.
Although there are several web-based offerings on the market today from a variety of sources, Microsoft will be hoping that the familiarity, deployment options, and synergies with other Microsoft technologies will add to the general appeal of this particular 'software plus services' strategy.
Social applications
A surprise member of Microsoft’s initial Office for the web family is OneNote, a note-taking and information-management program. OneNote is designed to capture ideas, thoughts, and information on a digital free-form surface. With powerful and flexible information-sharing capabilities including a peer-to-peer option, OneNote is good example of a social and collaborative application, and so the transition to the web should work well.
It will be interesting to see how Microsoft’s hitherto 'non-social' applications (Word, Excel, and PowerPoint) take on the new collaborative capabilities slated for this release, as although Microsoft Word has been with us for well over 20 years, it is still ostensibly a standalone, rather than a collaborative, application.
The delivery and commercial models for these new web-based office applications are as expected: an ad-supported version for the consumer (via Office Live), and a hosted, cloud-based, subscription service for businesses. Enterprises will also be offered an on-premises option, using Microsoft Office SharePoint Server as the deployment platform.
Mobile applications
Microsoft has also announced mobile versions of these applications. This would allow users to access their documents 'on-the-hoof' as it were via their mobile phones, thereby covering all three bases: desktop, browser, and mobile.
Microsoft has yet to state whether the applications will be accessible through gaming consoles, an as yet untapped sector of the market. By exploiting both Silverlight (Microsoft’s new web and mobile runtime environment for rich internet applications) and Ajax technologies, Microsoft says its Office Web applications will be able to run on a variety of platforms and browsers.
From an end-user point of view, one might expect an online version of Word, PowerPoint, or Excel to be very appealing, but as relatively few organisations have made the leap to Office 2007, the unfamiliar look and feel of Office 14 for the Web might work against Microsoft in the early days.
Of course there is an argument to suggest that these web-based offerings might kick-start a general migration toward Office 14 from earlier versions, but this will be dependent upon Microsoft producing a palatable set of applications that look and feel more like the versions of Word, Excel, and PowerPoint that most of us are used to.
Microsoft was always going to bring its Office applications to the web, but the issue of 'when' was always going to be commercial rather than technical. If we assume that Office accounts for around 20% of revenues (which were in excess of $50bn in 2007), then 2010 could be a very interesting year financially for Microsoft, as it seeks to drive $10bn worth of revenue from its Office-related software and services.
With online advertising revenues faltering, and 'cloud economics' generally pointing toward lower profit margins, Microsoft’s days of 'printing money' might well be coming to an end.

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