Microsoft's Raikes: Office won't go online

Computerworld - Microsoft Corp. will deliver future versions of Office as software, not as a service, and as complete packages, not modules that do incremental updates, Jeff Raikes, president of the company's business group, said late last week.

In a talk before analysts at the Morgan Stanley Technology Conference in San Francisco, Raikes discussed Microsoft's plans for Office. "The truth is, for the core of Windows and the core of Office, the most sense is to have them on a fairly predictable wave," said Raikes. "The reason why that's important [is that] most enterprises expect us to pull all the components together and thoroughly test them.

"They would rather have us do that than stream a lot of little changes out on an ongoing basis, because that makes their lives miserable," he said.

Raikes was responding to questions from analysts about whether Microsoft can successfully compete using traditional methods of development and distribution when it faces competition from the likes of Google Inc. and other companies that deliver software as Web-based services that can be upgraded incrementally -- and often.

"It's the most efficient way for us to deliver value to the customer," Raikes argued. "[But] we can add enhancements on an ongoing basis."

Rob Helm, an analyst at Directions on Microsoft, said it is unlikely Microsoft would make an about-face on Office's format or how it's sold. "Microsoft's most interested in getting people to upgrade," he said. Office Online, he pointed out, is the route the company has taken to convince users to move up. "There are a ton of templates and how-to articles there. Microsoft's trying to get people to use features in the most recent versions, to encourage them to upgrade."

As for online delivery, Helm said Microsoft's strategy is to come up with complimentary services, not mutate Office into online applications. "They've continued to come up with services," he said. "Even Office Online has some, like a calendar-sharing service. It's free, unlike Office Live, and its purpose is to encourage people to use the most recent version of Outlook."

Outlook 2007's calendar can be shared using Office Online. Previously, an Exchange server was needed to publish shared calendars. "We might expect to see more of that," said Helm.

Microsoft executives have fielded similar questions about Windows and its future, brought on by delays in Windows Vista, which was released more than five years after its predecessor, Windows XP. Microsoft CEO Steve Ballmer has said several times in the past few months that the company will never again take that long to upgrade the operating system.

Although Office's upgrade cycle has historically been much shorter -- three years is Microsoft's goal, Raikes said -- the suite is under pressure from quarters such as Google's Apps Premier, a $50-per-year per-seat hosted online application bundle that debuted last month.

"What must be scary to Microsoft isn't the idea of wholesale replacement of Office [by enterprises], but that there are lots of people in an organization who just don't need Office and who can get along with something like Google or OpenOffice.org," Helm said. "If that catches on, enterprise might drop their Office site license. That's when it becomes a serious threat."