A lot is riding on Office 2003, Angus Kidman reports.

Published in AustralianIT, June 24 2003

AS Microsoft prepares the release of Office 2003, it faces its strongest competition in the suite market for some time. Canny marketing and the dominant position of Word and Excel helped Microsoft all but eliminate its main rivals, Lotus and WordPerfect, by the mid-1990s, and enabled it to reap the rewards of market dominance.

Office has long been Microsoft's cash cow, responsible for about 60 per cent of its profit. It is a key element in the ecosystem of developers, trainers and users that surrounds the software giant.

It also provides a compelling reason for companies not to move away from Windows, which is Office's core platform.

At one point, Microsoft even developed plans to ship Office as part of the core Windows operating system, but was forced to change tack because of antitrust concerns.

A new threat to Microsoft comes mainly from StarOffice, which is backed and developed by its enterprise rival, Sun.

StarOffice's market share remains a fraction of that enjoyed by Office, but low licensing costs have made it appealing to many businesses, especially following the unhappy reception of Microsoft's Licensing 6.0 scheme in 2002.

The threat is two-pronged. Sun continues to develop and promote the commercial StarOffice product (version 6.1 is expected before year's end), while the open-source OpenOffice package, derived from the same code, is also winning support, especially in the growing Linux community.

OpenOffice's source code was downloaded more than 10 million times in its first year of availability.

While many users were most likely small developers, larger companies (including Telstra locally) have been evaluating the suite.

Microsoft is responding to this threat in several ways. The main feature enhancement being promoted in Office 2003 (the replacement for the current Office XP package, expected later this year) is better support for XML documents and for Microsoft's .NET data exchange platform.

Microsoft hopes that adding these features will mean that Office is used not just as a standard suite, but as a core element of other business applications.

For instance, rather than using a special client (or a web browser) to access your corporate ERP system, relevant data will be loaded directly into Excel.

"The software giant wants people to think of Office as more than just the productivity suite of Word, Excel, PowerPoint, Outlook and Access," says Gartner analyst Michael Silver.

Microsoft has expanded the range of Office packages available to business. Earlier versions were available in two main editions: Professional, which included the Access database, and Standard, which didn't.

Office 2003 will have six configurations. Basic will include Word, Excel and Outlook, but will only be available with a new PC. The Standard edition adds PowerPoint. The Student and Teacher version offers the same four programs, but can be installed on no more than three PCs. Small Business adds Publisher and the Office Business Contact Manager. Professional adds Access, while Professional Enterprise includes InfoPath, an XML forms package.

Additional flexibility may increase the appeal of the suite in large businesses, while the Basic edition is widely viewed as a means of ensuring PC sellers don't cast out Office for a cheaper alternative.

However, the strategy runs the risk of confusing buyers, especially enterprise users upgrading from earlier versions, such as Office 97, which Microsoft will stop supporting next year.