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2/13/2007
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Microsoft Office 2007 Doubles The Sales Of Office 2003 In Launch Week

Office 2007 took in 106.3% more dollars for retailers than the previous version, the NPD Group said, and retailers sold 108.6% more units.

Office 2007 reaped twice the amount of U.S. consumer dollars during its launch week than Office 2003, an indication that Microsoft has found the "sweet spot" in pricing for the productivity suite, a research firm said Tuesday.

Office 2007, which launched the week of Jan. 28, took in 106.3% more dollars for retailers than the previous version, the NPD Group said. In addition, retailers sold 108.6% more units. "It's hard to get anything bad out of these good numbers," NPD analyst Chris Swenson said.

On the business side, the numbers were almost as rosy. For the month of December, value-added resellers reported that the amount of revenue from Office 2007 soared 97.8% over Office 2003, and the number of units sold jumped 61.3%, the NPD Group said. The previous version's first full month of sales was in September 2003.

The solid business sales surprised Swenson. "With almost zero advertising and marketing until the January 30, 2007, retail launch, I expected U.S. commercial license sales of Office 2007 to be significantly below the sales of the previous version in its first full month on the market," he said. "They weren't. Sales of Office 2007 were significantly better."

The increase in commercial licenses came despite an increase in price. The average selling price to businesses rose 22.6%, or $55.62, to $301.33, the research firm said.

On the consumer side, the average selling price declined 1.1% to $206.93. Driving overall sales was the popularity of the Home and Student version of Office 2007, which retails for $149.95 but could be found for less. Amazon.com on Tuesday, for example, was selling the lowest-priced version for $129. "For consumers, they're hitting that sweet spot in terms of price," Swenson said.

This time around, however, Microsoft has dropped Outlook from the Home and Student version. The e-mail client was available in the comparable version in 2003. In dropping Outlook, Microsoft is apparently giving consumers a reason to upgrade to the Standard edition. "It's a matter of time before we see if that actually works," Swenson said.

The only version of Office 2007 that didn't bring home the bacon among consumers was the Ultimate version. While not releasing specific numbers, Swenson said sales "weren't as high as I would have expected."

"They didn't do an effective job of communicating the value of Office Ultimate to the consumer channel," he said.

Nevertheless, Microsoft's overall dollar share of the retail office productivity market increased a tad to 96.8% from 95.9%. Microsoft's dominance continues to grow despite assaults from rivals. IBM, for example, launched this week a collection of software that enables businesses to create a full desktop suite that can run on Linux or the Macintosh operating systems.

The NPD Group bases its reports from data supplied by some of the largest retailers and VARs in the United States.

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