Microsoft's Office-Come-Lately

The software behemoth plans its biggest-ever package of business-productivity apps. The catch: It's behind schedule

Microsoft (MSFT) is readying the next version of its Office suite of products for release later this year. But BusinessWeek Online has learned that the software won't be ready quite as soon as the company had hoped.

Internal plans had called for Microsoft to finish development on the software by August. That way it would have been ready at roughly the same time as Windows Vista, the next update to its operating-system franchise (see BW Online, 11/18/05, "Microsoft's New Word: Accountability").


  Yet company sources say development delays led Microsoft to push its release back about eight weeks. For one, problems with new graphics programs in the PowerPoint presentation software cause some instability, the sources say. Now the company is targeting late September or October for product completion, with general availability to customers shortly thereafter.

The delay is more a public-relations black eye than anything else, adding to the notion that Microsoft is challenged in getting its biggest products out the door. Since corporate buyers typically purchase Microsoft products through licensing deals, many have already paid for their new version of Office. So they'll take the 2007 version of Office when it arrives.

And for consumers, the Redmond (Wash.)-based company has historically offered a "technology guarantee" that lets them upgrade for free to new software if they make a purchase shortly before the product is released. That way, sales don't slow precipitously prior to product launches.


  Chris Capossela, vice-president of Microsoft's information worker product-management group, declined to comment on the delays, saying only that the product would be ready for customers in the second half of the year.

The company did, however, outline some plans for the next version of the Office family of products, including the new name and pricing schemes. Most notably, Office will move away from historic precedent and not take the name of the Windows release that's launching at the same time. Instead of being called Office Vista, the product family will go by the name 2007 Microsoft Office.

That's because the Office release schedule has been more frequent than the five-year lapse between Windows Vista and predecessor Windows XP. When Office moved from Office XP to Office 2003, some customers weren't sure which one was newest. "We don't want to confuse people," Capossela says.


  The 2007 release will also come in a wider variety of flavors, letting customers pick and choose features. That should address one frequent Office customer complaint that new versions often add functions they don't need.

Capossela says that wasn't the motivation, but acknowledged users who aren't interested in the full suite of software would be more likely to find what they're after. "We're providing far more flexibility in what people can buy," Capossela adds.

Microsoft plans to offer seven different versions of the Office suite. At the low end, it will sell the barebones Microsoft Office Basic 2007, which includes the Word word-processing program, the Excel spreadsheet program, and the Outlook e-mail application. That will only be available through computer makers, which will determine how much to charge.


  It will also provide Microsoft Office Home and Student 2007 edition, a $149 package that will be available to anyone, not just students and teachers, for the first time.

At the high end, Microsoft will offer Microsoft Office Enterprise 2007 with 10 different applications, including PowerPoint, the OneNote note-taking application, and the Groove collaboration software that Microsoft acquired last year (see BW Online, 3/11/05, "Microsoft's Fit With Groove"). That will only be available through volume licensing to corporate customers, for whom prices will vary.

The Office system includes more server software than ever before (see BW, 9/16/02, "Microsoft, Beyond the Office"). Microsoft will offer five different server software programs under the Office banner. These include Microsoft Office Forms Server 2007, to help manage electronic forms, and Microsoft Office SharePoint Server 2007, the software outfit's popular program that manages intranet Web sites in order to foster collaboration.


  Those, coupled with the wide buffet of other Office offerings, could make the 2007 version a bit of a challenge to sell, says Jim Murphy, research director at AMR Research. "It's going to be a significant upgrade in terms of cost," Murphy says. "There's a risk in making the hump too big."

Still, when Office arrives, it will be the largest offering of business-productivity applications in the Microsoft's history. It just won't arrive as quickly as planned.

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