Microsoft Has Dual-Track Plan For Office Products

When practically everyone uses your product, how do you keep adding sales? It's a question facing Microsoft as the company starts testing the next version of its Office productivity suite, code-named Office 10 and due toward the middle of next year.

More than 120 million computer users already license a version of Microsoft Office; the company shipped its most recent offering, Office 2000, in June of last year. While the company won't say how many users have upgraded to the new suite, it's clear that fewer people each year are switching to the latest version of Office, a product which generates about 40% of Microsoft's revenue.

At a meeting with financial analysts last month, Microsoft group VP Bob Muglia said Office revenue grew 15% during the company's 2000 fiscal year, which ended June 30. That's not bad, yet during the two previous years, sales of Office and associated developer tools grew about 25%.

Enter a dual-tracked plan in which Microsoft will push Office 10 as the upgrade product for business users and consumers running apps such as Word, Excel, and Outlook from a PC desktop, while simultaneously developing a product called Office.Net, designed for application service providers that want to deliver the Office apps to small businesses and other users through a Web browser.

Office 10 has some nifty new technology, including the ability to recognize speech commands and take dictation, the ability save and read Excel and Access files in the Extensible Markup Language format, and an Outlook E-mail app that lets users view Microsoft Exchange and online E-mail messages from within the same interface. The prerelease software also includes improved collaboration features, such as the ability to merge several users' changes into a document.

Yet as Microsoft develops improved desktop versions of Office, it's looking toward scenarios--admittedly several years away--in which more users will perform such tasks through a Web browser. Microsoft offers its current Office 2000 product to ASPs in a version called Office Online, but the software uses the Windows Terminal Server environment, which means service providers must administer a piece of client-side that's not a Web browser. Office.Net, which isn't due for at least two years, would contain code flexible enough to run within a browser, on a PC, or on a handheld device.

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