Microsoft finally to bring Office to the Web, Windows smart phones

Exec Chris Capossela says it won't eat into existing Office sales

After teasing the market multiple times, Microsoft Corp. plans to finally confirm today that it's bringing its most money-making desktop software franchise online and to smart phones.

Microsoft will release lightweight versions of four components of its Microsoft Office suite for the Web and Windows Mobile smart phones, said Chris Capossela, senior vice president of Microsoft's business division, in an interview on Monday.

The four components are Word, Excel, PowerPoint and OneNote. They will become available when the next version of Office, code-named "Office 14," arrives late next year, he said.

A private technology preview of Office Web will be available later this year.

"This is the big fish jumping into the pond," wrote IDC analyst Melissa Webster via e-mail. "Of course, we need to see what the new Web-based tools look like ... but with something like 97% share of the market, Microsoft is certainly the very strong incumbent."

Microsoft's challenge, said Webster, is ensuring that Office Web doesn't end up "cannibalizing" its existing stellar revenue for Office.

Last week, Microsoft reported that revenue from the Microsoft business division (MBD) grew 20% year over year to $4.95 billion in the most recent quarter.

That is more than Microsoft's client division, which makes Windows. Most of MBD's revenue comes from Office, though Microsoft doesn't break out an exact percentage.

1 billion users

"We've done incredibly well with Office 2007. At the same time, Windows has 1 billion users. Office has only 500 million," Capossela said. In other words, there are plenty of "green field" markets ripe for Office Web. Half of employees are "deskless workers" such as doctors, nurses, factory workers, bank branch tellers, pilots and others who typically don't get a full Office suite at work today, but might be good candidates for a cheaper, hosted service, he said.

"The world tends to overestimate the cannibalization risk. We see an awesome growth opportunity," he said.

Consumers will be able to subscribe to Office Web and even get it at a discount price, provided they are willing to view Web ads.

Business customers seeking "more manageability and control" will be able to buy subscriptions to Office Web similar to the subscription Microsoft offers for a bundle combining Web-based versions of Exchange and SharePoint. That costs $3 per user per month.

Enterprises may also get Office Web through conventional volume licensing software contracts, which will allow them to either install Office on desktop and other client PCs, or have Microsoft host it on their servers, Capossela said.

"This is a big difference from Web 2.0-style competitors, who say it has to all be on the could," he said.

Capossela said exact pricing won't be available for a while.

Office Web will solve two problems that online competitors such as Google Docs, Zoho Docs and others don't, claimed Capossela. One is that Office Web, unlike non-Microsoft products, can guarantee that the "viewing experience is fantastic" and that formatting and meta data from Office documents don't "get munged up," he said.

Second, Office Web will provide a superior "end-to-end solution" by letting users view and edit documents whenever they want to, including browsers such as Firefox, Internet Explorer and Safari and Windows Mobile smart phones. Microsoft may add support for other non-Windows Mobile smart phones, Mac Office or other Web browsers.

"We want to be No. 1 in productivity, period, so we are constantly assessing the right strategy," Capossela said.

Office Web will use Microsoft's Silverlight rich Internet plug-in for added functionality such as extra zooming or prettified fonts, though users aren't required to use it, he said.

Some features from the regular desktop version of Office will be cut from Office Web, said Capossela. Also, Microsoft isn't using the new "ribbon" interface from Office 2007 because it takes up too much space, especially on small smart-phone screens. Instead, it's employing a modified version of its more conventional drag-down menus from Office 2003 and earlier, Capossela said.

Microsoft had made several strong hints earlier this year that it was poised to introduce Office Web.

In February, Microsoft chairman Bill Gates said that Office 14 would be much more Web-friendly.

In April, Microsoft was reportedly close to allowing hosting providers to "stream" Office to end users via the Web.

That same month, it confirmed plans to bring out a low-end Office suite that combines Web-based security services code-named "Albany." Microsoft said in July that consumers can subscribe to the Web/desktop suite, now renamed "Equipt," for $70 per year.

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