Gartner: Microsoft licensing could push users to StarOffice

May 1, 2002 (Computerworld)

SAN DIEGO -- End-user unrest over Microsoft Corp.'s enterprise licensing plan may prompt some companies to move from Microsoft Office suite to rival Sun Microsystems Inc.'s personal productivity suite, StarOffice, predicts Gartner Group Inc.

Gartner is estimating that StarOffice has a slightly better than 50-50 chance of taking 10% of the office productivity suite market -- at Microsoft's expense -- by the end of 2004.

Michael Silver, a Gartner analyst, said some firms are beginning to weigh the cost and licensing terms of Microsoft's Office against StarOffice's improving compatibility with Microsoft file formats and its expected lower pricing.

Sun intends to begin charging for StarOffice when Version 6.0 is released sometime by the end of next month, but it will couple that move with support services (see story). Pricing hasn't been announced, but a Sun official said Gartner's per-user estimate of $25 to $75 per user, depending on volume, is in the ballpark.

"StarOffice has a chance, based on better compatibility, some mind share and Microsoft missteps," said Silver. But migration costs, end-user training and converting documents from Microsoft file formats could deter companies, he said.

Gartner's prediction of a potential 10% market share for StarOffice may seem small, but it may be the boldest prediction to date that there's a product with the potential to dent Microsoft's overwhelming share of a market for an application that's key to its desktop dominance.

But the hurdles for reaching that market share could be high.

David Morris, a senior vice president of e-business solutions at AmeriCredit Corp. in Fort Worth, Texas, is among those who have downloaded StarOffice and tried it out. He called it "a pretty good product" but said he's not about to roll it out to his 6,000 users.

The training and infrastructure costs associated with moving end users to a new personal productivity suite pose too big a barrier, said Morris. "We don't think there are viable alternatives," he said.

But another end user attending Gartner's Symposium/ITxpo here, Mike Thiele, associate director of corporate IT infrastructure at Gilead Sciences Inc., a biopharmaceutical company in Foster City, Calif., said his company has begun looking at alternatives to Office, in part because it doesn't want to have to rely on one vendor.

But switching won't be easy. "We're going to have to define some pretty compelling reasons," he said.

The U.S. Court of Appeals in the District of Columbia last year upheld a ruling that Microsoft has a monopoly in Windows operating systems, but the court didn't weigh whether Office should be considered a monopoly. According to IDC in Framingham, Mass., however, Microsoft's Office market share is higher than that of its operating system market share, primarily because Office is available for Apple Computer Inc.'s Macintosh.

In 2000, Microsoft's office share by revenue for Word and Excel was about 94%. Windows was at 92%, according to IDC.

The nine states that have rejected the Bush administration settlement in the case to push for tougher remedies believe Office is a potential linchpin for attacking Microsoft's desktop monopoly. Those states want the court to force Microsoft to auction licenses to vendors, such as Linux vendor Red Hat Inc., which would then be allowed to port Office to other operating systems.

Today, StarOffice has about 39,000 users at Sun, with the second largest deployment being at the U.S. Department of Defense, with 15,000, according to Tony Siress, a senior director of marketing at Sun. Globally, there are 10 million users. The change to a pricing model for StarOffice is intended to let users know that StarOffice is "a committed, sustainable offering."

Gartner said StarOffice will have its greatest appeal to enterprises with employees who are relatively light users of Office and don't require its advanced features. Sun sees its "sweet spot" for potential customers as Office 95 and 97 end users who face migration and cost issues if they move up to newer versions of Office, said Siress.

End users have long praised Office for bringing near universal standards for exchanging documents. But Microsoft's new enterprise licensing plan, announced last year, drew complaints from many firms, which said it would raise their costs.

Gordon Pope, manager of network computing at British Columbia Hydro and Power Authority in Vancouver, said those licensing changes have raised concerns.

"Would I look to find alternatives to Microsoft? Absolutely," said Pope. "The concern that we have is [that] the weirdness of the licensing is costing us a lot of money every couple of years."

But Barry Cole, who heads e-business application development at Exelon Energy Delivery, a subsidiary of Exelon Corp. in Chicago, said he can't see moving from Microsoft Office.

"It's not worth the investment in time and energy to move off of it," said Cole. "We have too many other strategic priorities. Those are commodity applications at this point that don't seem to be worth spending the time, attention and risk."



Related stories:

• Sun's Webtop replaces StarPortal project, March 8, 2001



• Microsoft to expand Windows source-code sharing program, Feb. 2, 2001



• StarOffice open-source code released to rocky start, Oct. 13, 2000