The Cloud will “get better” as Microsoft sets up Office there

Microsoft’s plan to release Office Web Application along with the next boxed version of its popular productivity software suite will have a huge impact on the software-as-a-service market, an analyst says.

The Redmond-based software giant announced Oct. 28 that Office Web would launch alongside Office 14.

In addition to the usual local software clients, users will also get Web-based access to light-weight versions of Word, Excel, PowerPoint and OneNote.

Microsoft’s move to puts Office in the cloud is a game-changer, according to Tim Hickernell, associate senior research analyst with London, Ont.-based Info-Tech Research Group.

“Microsoft will bring greater legitimacy to productivity applications as a service than anyone ever could,” he says. “Microsoft will benefit the entire market by doing this.”

The strategy that Microsoft dubs “software plus services” blows away arguments that software models must be completely on premise, or entirely in the cloud. The actual trend in the enterprise is a mix of the two is what companies really want to use.

“The untapped potential for productivity applications has always been contextual applications in other processes,” Hickernell says. “Just enough presentation added in to your sales system, for example.”

That’s where Microsoft’s strategy is targeted.

The model for Office Web is to act an extension of the rich client installed on a local machine. While a local user could create a document and edit it with his or her installed software, another user could work on the same document via a Web browser.

It’s the sort of “just enough” computing model that has attracted many companies – as in “just enough” presentation power for your sales workers in the field, or “just enough” processing power on that spreadsheet for a manufacturing employee on the line.

It’s a method that combines the power of client-based computing with the flexibility of the Web, says Jason Brommet, senior product marketing manager at Microsoft Canada.

“Some players have focused on Web-only access,” he says. “There’s been a lot of news about the limitations of that experience.”

Google introduced Google Apps for Enterprise in February 2007. Since then it has expanded the functionality of that service, most recently to include video conferencing through the Google Talk tool.

The online productivity suite offers – which is hosted by Google in its data centres – offers  many of the same functions provided by Office, including a word processor, spreadsheet editor, and e-mail client.

The company says its approach sets it apart from the competition. Its $50 per user, per year price point is very compelling, says Scott Goodhew, enterprise sales manager with Google Canada.  

Worldwide, Google has about 200,000 business customers that use its Search Appliance, Goodhew adds, while there are around 500,000 businesses that have moved their domains to reside within Google Apps.

But Hickernell says Google, so far, has failed to adequately communicate the value of Google Apps to enterprises.

The numbers, he says, show poor enterprise adoption rates, with few documents ever existing within Google’s space.

When it comes right down to it, enterprise users aren’t budging from using Microsoft Office.

Microsoft will use its extensive installed user base to promote usage of Office Web.

Both Office 2003 documents and Office 2007 documents are currently compatible with Office Live, Brommet says, although Microsoft hasn’t yet disclosed whether Office Web will be backwards compatible with those same formats. Office 14 will support the older formats.

Most companies in North America have Microsoft entrenched in their daily business routines and would be hard-pressed to switch to any competitor, Hickernell says.
“You still have to look at what format the majority of your business documents are in and what do your partners have,” he says. “It doesn’t matter if you think Microsoft’s binaries are good or bad, because that’s your environment.”

Consumers will be able to use the Office Web service for free with an ad-based model, or pay a subscription fee to drop the ads. Businesses will re-work existing licenses to access the hosted subscription service.

Though Office Web has been described as “lightweight” in Microsoft literature, full details on what functionality will be axed from the desktop version hasn’t been released. But Brommet gives a couple examples of what to expect.

“Heavy complex calculations in Excel would be a perfect example, or editing heavy graphics in a PowerPoint,” he says. “You’ll still want to work in the client environment to drive that higher processing requirement.”

Still, the Web browser experience will be similar to what Office 2007 users are used to seeing today, he adds. Little difference will be noticed.

The service and software approach could be a Microsoft springboard to delivering more advanced services via the cloud, Hickernell says.

The software behemoth has been saying some time that it would consider selling lightweight clients and then delivering high-grade features a la carte. But it is easier to start with the lightweight features on the Web.

“They also have an opportunity to integrate more of these services-on-demand with their own applications in the dynamics line,” the analyst says. “It would be a very valuable thing to sell alongside.”

Microsoft could give users of its Dynamic CRM software “just enough” word processing, for example.

There will be a limited technical preview of Office Web released before the end of the year. Interested users can register through Office Live to find out more information.

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