IBM Rearms Against Microsoft Office

Could IBM be launching yet another proxy war vs. Microsoft Office? Perhaps, although the company is coy about it.

IBM's Lotus Software group is embedding updated spreadsheet, word processing and presentation editors in the upcoming Notes 8 client.

In the words of one IBM executive, these Open Document Format-compliant editors have "way more" functionality than most users need. The editors will let users open, edit and save documents created with different generations of Microsoft Office applications, including Office 2007. They also will support other ODF-compatible applications.

The public beta for the Notes 8 client and Domino 8 is due out next month, with broad availability expected around midyear.

IBM and Microsoft have faced off on the Office front -- and Office format front -- for some time. In December 2005, IBM threw its weight behind the ODF effort and pledged to support the format in its Workplace Managed Client. Now that support -- for updated editors -- is flowing into Notes, the newly anointed "strategic" e-mail client from IBM.

Microsoft is backing its Open XML format, which recently won approval by the Ecma International standards body, over IBM's objection, and is now moving for the International Standards Organization's approval.

IBM executives were careful -- sometimes -- to paint this as a customer choice issue, not an explicit anti-Microsoft move.

"It's not about Outlook vs. Notes or SharePoint vs. this. It's that our portfolio tells a very compelling story about the way people work. Where we differ [from Microsoft] is that with Outlook and SharePoint and Office, Microsoft tells you, 'This is how thou shall work.' For some people, that is a fine choice. For others, maybe not," said Alan Lepofsky, senior manager of strategy and evangelism at IBM's Lotus Software Group.

Three years ago, IBM tried something similar when it bundled earlier versions of the editors with WebSphere Portal. Though the message wasn't public, IBM sales staff often pitched large customers on cost savings associated with using the editors for many of their knowledge workers, rather than buying "expensive" Office upgrades from Microsoft for the whole company.

The idea was that the customer would save enough on Office upgrades to pay for the enterprise portal, insiders said at the time. Large companies therefore could upgrade just their power users to the new Office, while the rank-and-file could stay with older versions or use the editors. It's unclear how well that worked since Microsoft retains a prohibitive market share dominance. Many of those users, however, are assumed to be on old versions of Office. When asked whether a repeat of portal-bundle sales tactic is planned, IBM Lotus executives responded with smiles and shrugs. "Free is a great price point," said Penny Scharfman, program director for Lotus Domino products.

Such a move might give customers weighing an upgrade to Office 2007 leverage against Microsoft on price, some industry observers said. Office 2007's consumer launch is next week in New York. Volume customers were able to get the product starting late last year.

IBM also contrasts its cross-platform support to the all-enveloping Microsoft stack. Domino supports Windows, Linux and Unix back-ends and the Notes client supports Linux, Windows, and Macintosh operating systems.

Whatever IBM has up its sleeves, the Microsoft Office juggernaut seems entrenched. Since Office pounded Lotus SmartSuite years ago, IBM hasn't had a ton of credibility in this software segment, said David Ferris, president of research firm Ferris Networks.

End-user benefits of free, commonly used functions are pretty self-evident. Ferris said the opportunity for Notes/Domino VARs is about cross- and up-sell opportunities with the new Connections business-savvy social networking wares and QuickR file and data sharing software announced Monday at Lotusphere 2007 in Orlando, Fla.

In his opening keynote, IBM Lotus General Manager Mike Rhodin noted that IBM's software lets employees work on many devices, many venues and many operating systems. During his speech, he said that "could make Office obsolete. I like the sound of that."

Ken Bisconti, IBM Lotus vice president of product management, said, "This is not a play vs. Microsoft." Still, he added, "Many customers cannot pay $100 to $150 a user for a word processor upgrade when that's more than they spend on CRM."

John Marks, CEO of JDM Infrastructure, a Rosemont, Ill.-based solution provider, said IBM will have a tough time going up against Microsoft Office.

"How are you going to beat Microsoft at Office? How do you get a Fortune 500 company to move from Office to anything else?" Marks said. "Who are you kidding? I don't know which would be tougher to do, beating Microsoft with Office and Outlook, trying to build a hamburger chain bigger than McDonald's or coming up with a bigger soft drink than Coca-Cola."

Andy Vabulas, CEO of Ibis, a longtime Microsoft Gold partner in Atlanta, said, "If people look at Office 2007 and the whole Office system vs. a bunch of editors, I think they'll find it's an apples-and-oranges comparison."

Still another Microsoft partner apprised of this IBM move had to admit: "Wow, that's ballsy."

STEVEn BURKE contributed to this story.