October 1, 2007

The Barbarians Are At The Gate, But Microsoft Moves To Protect Office Revenues

Michael Arrington

49 comments »

The barbarians are at the gate, a new horde is on the way, but no one seems to be defending the castle. Instead, the Microsoft Office warriors are rebranding, repackaging and relaunching old products and calling them new.

Not to be confused with the 2005 announcement of Office Live, Microsoft today announced Office Live Workspace and reiterated its position that client software is the future, and that online services serve only to enhance the client experience.

The old Office Live, an online service that offers customers a website, online email, office doc sharing and collaboration and third party services, is now being called Office Live Small Businesses. The new Office Live is a way to share and collaborate on Office documents with others (its Sharepoint, hosted by Microsoft), but users still need the expensive and bulky client based software.

Sign up to test the new service here. New users will be accepted over time as Microsoft ramps up the service. Included will be 250 MB for online document storage. Users can upload and share office documents and can email friends and colleagues to invite them to view those documents. New documents cannot be created online. It isn’t even totally clear if documents can be edited online, or if viewers can only leave comments.

Google and other Office competitors will be breathing a sigh of relief this morning - this is not a decisive move by Microsoft to crush the competition as they did with Netscape more than a decade ago. Microsoft has failed to understand the real power of Google Docs - easy, no hassle document creation, collaboration and access from the browser. And it will take them another two years of fidgeting before they really get scared and react properly. Microsoft is falling into the classic trap of failing to realize the disruptive nature of a new competitive technology, instead focusing on the massive revenues it generates from their aging Office suite. Google Docs is tearing the Office wall down, and Microsoft has failed to respond. What a bummer - it would be a good fight if Microsoft would actually get into the ring.

Sphere It

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The Barbarians Are At The Gate, But Microsoft Moves To Protect Office Revenues »TechAddress

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Comments

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MeTheGeek

October 1st, 2007 at 6:53 am

Absolutely on target Michael. This is just more good news for smaller contenders like OpenGoo, Thinkfree, Zimbra (Yahoo) and Zoho.
Todd

October 1st, 2007 at 6:58 am

“…In biology and ecology, extinction is the cessation of existence of a species or group of taxa, reducing biodiversity. The moment of extinction is generally considered to be the death of the last individual of that species (although the capacity to breed and recover may have been lost before this point). Because a species’ potential range may be very large, determining this moment is difficult, and is usually done retrospectively.”

http://en.wikipedia.org/wiki/Extinction
richard hyett

October 1st, 2007 at 7:14 am

The place I work, access to gmail is forbidden, access to hotmail forbidden, all work documents are kept in one centrally organised place. We are all Office 2003 users here, I can’t see things changing. Last week I visited some offices where most of the desks had CRT monitors, we laughed (inwardly), I can’t see things changing there in a hurry either.
WEB

October 1st, 2007 at 7:15 am

It is possible that the client software is an additional security measure.

Also, perhaps businesses might be more prone to participate with this extra added layer of security or middle layer.

Perhaps, small businesses and home offices may use Web based software - but the mid level market Microsoft has to convince, may be more resistant and more demanding before taking a chance.

Office Live Workspace will provide anywhere-access to Office documents, including Word, Excel and PowerPoint files. In other words, these documents will go wherever people go when they’re away from their usual desktop. People will be able to work on documents from any Microsoft Office-equipped computer with an Internet connection – or review and comment on documents on devices that only offer Web access.

People also will be able to collaborate on documents and share information with friends, colleagues or classmates simply by sending an e-mail and inviting them to a password-protected online workspace. This will help people avoid the pain of trying to find the latest version of a document, or having to pull together multiple versions of documents. They can also easily post files to their dedicated password-protected online workspace directly from the Office application in which they’re working.

PressPass: Tell us more about the new developer offerings.
Martin Edic

October 1st, 2007 at 7:29 am

Is it just me or does the whole Live branding schema seem incredibly confusing? ‘Live’ implies on the web, not on the desktop to me yet they keep trying to tie you down to a dedicated machine. This, combined with the Vista debacle, seems to indicate a serious strategic problem within the company, something that goes right to the top. This is a very poorly managed business which could unravel faster than we might think.
Though I own Office, I am increasingly using Google Apps and simply saving them to the desktop as a backup. I share them with my business partner all the time which is far more convenient than attaching and sending. Being able to access them anywhere from any machine is the way of the future, IMHO.
James Thomas

October 1st, 2007 at 7:39 am

They’re absolutely right. Desktop apps aren’t going anywhere, especially in the business market. I find I’m liking desktop apps with net connectivity more and more. The internet is more than HTTP and browsers, you know.
Danny

October 1st, 2007 at 7:43 am

What you write is true but it is probably hard for them to see past the fact that Office 2007 is selling like mad and they recently had their biggest quarter ever. Their success is the biggest problem they have.

The picture is incredibly stupid though.
David Carter

October 1st, 2007 at 7:53 am

Take a look at the comments by Eric Gilmore at Microsoft.

“There are cases where, potentially, full-blown editing online would be an interesting solution, but it isn’t a majority of the cases. That’s a reality today, and that’s what we’re hearing. If you think of the future, we want to enable a whole host of scenarios. Nothing’s off the table. If you look at our history, things like Outlook Web Access, Excel Web Services, we’ve done Web-based tools to allow that to happen. Nothing to talk about today, but it’s a cool area that we’re certainly focused on.”
http://blog.seattlepi.nwsource.....122795.asp

This seems to me to be the real story. Microsoft is being a fast follower and Office Live Workspace is a entry service that would get people to store all their docs in the cloud and over time they will let you do more and more.
Rick Cook

October 1st, 2007 at 8:07 am

I suspect Office Live Workspace is going to run into problems because of compliance issues.

A lot of companies now have extremely strict policies on document management, including storing stuff in one central respository instead of on user’s computers.

The reason is that new regulations, from SOX to HIPPA to the new rules of federal procedure pretty much mandate control through the entire document life cycle.

The new corporate nightmare is that they certify to the court or agency that they have turned over all the requested documents only to have another potentially damaging document turn up on somebody’s laptop or in their Office Live account.

Whether that’s a realistic fear or not in the case of Office Live, a lot of companies are not going to allow potentially critical stuff to be stored off the corporate network.
dutch

October 1st, 2007 at 8:19 am

You haven’t quantified anything. you haven’t established with actual numbers that these upstarts are hurting msft in any way. it’s a typically lack of substance attack on msft, which of course is in fashion in the blogoshpere.
Rob Dolin

October 1st, 2007 at 8:22 am

Google docs is interesting, but so is Jimmy Wales’s “Wikia.” It seems to me that multiple people authoring a web-based word processor document is not the only collaboration method. Having recently using a wikia site to collaboratively write a requirements document, I think folks shouldn’t get too focused on the web-based office-like tools. There are other metaphors. Check out Wet Paint too. FWIW–
–Rob
JohnN

October 1st, 2007 at 8:45 am

Paul Graham called them dead a while back. Its all coming true if you ask me.

http://www.paulgraham.com/microsoft.html
Eric

October 1st, 2007 at 9:02 am

Note to Microsoft: Fire whoever is in charge of branding.

“Office Live Small Business” is at least three words longer than it ought to be. And the whole “Live” moniker is now officially meaningless.
John

October 1st, 2007 at 9:16 am

Fix your spelling mistakes “User scan upload and hare documents”. Proof reading your posts would be a plus too. This relates to all of the authors on TechCrunch. They are all too excited to click the publish button and see the millions roll into their bank accounts.
Pete A

October 1st, 2007 at 9:34 am

How is “Google Docs is tearing the Office wall down, and Microsoft has failed to respond” ? I’d like to think that was the case, but dutch is right in asking for numbers. The fact is, that Microsoft competes with features, while the online word processors compete on price. It turns out people are willing to pay for features that enable them to have more than just a simple text file at the end of the day. Also, Sharepoint is currently being installed in companies at a tremendous rate, and I’m guessing if a company shells out for that (an umbrella product, consisting of Sharepoint server, SqlServer, and whatever other MS product you want to throw into the mix), they’ll shell out for a copy or two of Office. And then you have to consider the millions of word documents out there people want to re-use. Sure you can open them in openoffice or a free word processor, if you’re willing to lose all your formatting. It turns out that annoys the hell out of users, they’re willing to pay for Office to keep their formatting and features and not have to deal with the headaches of converting their docs. I’m not here to defend MS, just throwing some valid observations into the mix. I don’t think Google and MS are really fighting on the office front yet, Google is playing catch up.
Breck

October 1st, 2007 at 9:42 am

Office 2007 is 100x better than Google Docs.

No one is going to dethrone Microsoft from the Office Market(Vista is a different story).

This should be terrible news for GDocs etc. If Microsoft solves the easy collaboration issue, Office 07 will be better than ever and there will be no reason to use anything else.

(BTW, OpenOffice > MS 2003 IMHO. But MSO2007 >>> OpenOffice)
Stephane Rodriguez

October 1st, 2007 at 9:46 am

Arrington said “this is not a decisive move by Microsoft to crush the competition as they did with Netscape more than a decade ago.”

You realize if Microsoft shipped a full online Office product, they would cannibalize themselves, right ?
Brian

October 1st, 2007 at 10:08 am

I think what is most amazing about this article is the belief that everything should be free to be competitive and supported by advertising. You know how many clicks Google needs to match the sell of one copy of MS Office?

I tried Google Docs and I can say for certain it will be a long time before I moved from MS Office to Google Docs. Google Docs was so slow I nearly threw my computer out the window. Free is not always the best answer.

Also, doesn’t this latest update allow Microsoft to activate a full online version very easily without foregoing the tens of billions it will make in the next few years from selling Office?
Raghu Kulkarni

October 1st, 2007 at 10:09 am

Michael,

Driveway (http://www.driveway.com) already supports direct editing of word, excel and powepoint files using Microsoft office software on user’s PC with data on the web. We did email you details on this recently launched service a few weeks ago. You just need to upload the files for ‘edit’. You can even save the edit links on your desktop as ‘desktop widgets’. It also supports ‘lock’ing similar to LAN based office access.

I guess we beat Microsoft in ‘live editing’ of office documents using office software.

Raghu Kulkarni
Driveway.com
vruz

October 1st, 2007 at 10:37 am

they’re oh so toast…
and Google is not alone… Adobe jumped train today as well, and the product (though still very basic) is good enough to give us a glimpse of a Microsoft-less world.

Microsoft Death Recap:

- OpenOffice 2.3
(now native for the Mac too, something Microsoft won’t deliver until who knows when)

- StarOffice 8
(offered for free by Google as part of Google Pack, a joint initiative with Sun Microsystems, it works wonders and you don’t have to keep a licence inventory !!!)

- Adobe acquires Buzzword
(simple, beautiful and it WORKS, Microsoft can’t even show us anything barely similar to what Buzzword does TODAY)

- IBM Lotus Symphony
(based on OpenOffice,

- KDE / Koffice
(originally for Linux only now RUNS ON WINDOWS AND MAC TOO, again something Microsoft couldn’t afford/didn’t want to do)

Microsoft is becoming largely irrelevant in this field at an incredible pace.

But the most shocking thing is they’re doing absolutely nothing about it, other than whining in courts and witchhunting Linux developers.

They’re oh so toast, and I won’t shed a tear for them.
vruz

October 1st, 2007 at 10:39 am

@Stephane Rodriguez:

You realise that if Microsoft don’t cannibalise themselves, the competition will do it for them ?

That’s how the market works, learn to love it.

Microsoft managed to trick the market and the law for much too long, enough already.
Mark Ashton

October 1st, 2007 at 10:46 am

Michael - I think you’re missing the boat on this one. Office is among the most widely used software in the world. It will be a long time if ever that most companies are going to be happy with Googe docs or other Ajax-style/web-based services. Office Live Workspaces is another reason why Google etal will find it hard to compete in most cases. This type of service will allow users/companies to use Office on the PC/Mac with the incomprable feature set, good performance etc. AND make it super easy to “Save-as” to an WEb-based service. This is a best of both world’s approach. The alternative is to use a comparatively poor performing (or non performing if no net connection is available) feature anemic product.
sojo

October 1st, 2007 at 10:54 am

Couldn’t agree with you more Michael.
ESL

October 1st, 2007 at 11:21 am

“User scan upload and hare office documents?”
Danny

October 1st, 2007 at 11:36 am

Does anyone here have the slightest idea how MS Office is actually used in really big corporations? (A 59 person startup doesn’t count.) First, in a really big shop Office is often programmed to be company specific. Meaning that word/Powerpoint or Excel function a backend to the company’s own text entry interface. You can pretty much do anything you want with it in order to make sure the user conforms to company format/policy. Last I checked Google Docs didn’t even support headers. 2) As noted by a poster above - there are compliance issues for many of the biggest user’s of word processing software. MS telling them to throw everything online is not a good strategy. 3) Sharepoints essentially does a lot of the things for a big company that google docs does for the average user. Not as flexible and easy but in a far more controlled way.

The truth is the competition is as far behind in features as MS is in having everything online.

>That’s how the market works, learn to love it.

That’s right! When MS won it was trickery. When it loses it is “how the market works”.

Also, just in case anyone cares about actual numbers rather than skylarking: According to NPD - Microsoft’s overall dollar share of the retail office productivity market has increased over the last year. It is now 96.8%.
It seems both Office 2007 and, surprisingly, Mac Office 2004 are selling really well. The Mac suite is 20% of all retail sales. (Even people fleeing MS buy Office.) Sorry Michael, you might be underestimating the size of that gate.
Kaizyn

October 1st, 2007 at 12:03 pm

Stupid comments. Moving a huge, monolithic suite like MS Office to a web-based app will take time. Microsoft first can move the read capability to the web. Then after that, port the rest of the Office functionality (editing and collaborative editing) online. They may be waiting for Silverlight to mature to the point where it can support this functionality. While I’m no fan of Microsoft, the game really is theirs to lose.
Andre de Cavaignac

October 1st, 2007 at 12:13 pm

Take a step back for a second. Do you really think that AJAX, JavaScript and HTML are the wave of the future? These technologies aren’t fast or robust enough for major apps, hence the move to Apollo and Silverlight. All we’re doing is reinventing Java WebStart and .NET ClickOnce.

These apps are huge because of the featureset that is demanded over time. In time, a Google spreadsheet will:
1) Not be HTML, but will be some easy-deployment (Apollo or some other desktop runtime) app
2) Be monolithic because they’ll keep adding features people need.

All Microsoft is doing is going in the opposite direction, and in the end they’ll meet in the middle. Google will have to move from light-client to rich-client and Microsoft from heavy-client to rich-client.

As far as Google Docs as a viable Office tool, I just don’t see it — not today at least. No one actually uses Google Docs for real document composition or spreadsheet work, thats why everyone still has Office on their machine. Truth is, until its not HTML and JavaScript, it won’t be viable for real Office work.
nemrut

October 1st, 2007 at 12:36 pm

MS is ‘rebranding’ themselves into oblivion. Computing ‘in the cloud’ is the future–can anyone dispute this?

Ballmer is steering a sinking ship while trying to maintain that complex software is only viable in physical form…
Steve Ballmer

October 1st, 2007 at 12:46 pm

You gotta be kidding!

“…. Instead, the Microsoft Office warriors are rebranding, repackaging and relaunching old products and calling them new.”

Hey guys look, all of the menus have been relocated!

http://fakesteveballmer.blogspot.com
Marco

October 1st, 2007 at 12:47 pm

If this new product would only be half as good as Google Docs, I’d sure switch.

Google Docs might be easy to use, but it so ugly. Sure, design has never been Google’s thing… but when I want to write/edit a document i want to see how it looks like when I print it on a paper later. There is no real page view / preview.

All it shows is a huge blank “white page”… i don’t even know when it’s using the next line…

For ***playing around*** it might be good… but far away from becoming an ALTERNATIVE to MS Word. The newest Adobe ‘Word application’ looks even better then Google Docs.
Velioncho

October 1st, 2007 at 1:04 pm

oh please folks, dont compare this with IE vs Netscape.

Netscape’s product was much superior compared to IE at that time.

Here Google Docs and others are a joke compared to MS Office prodcuts.

As much as I dont like MSFT, I admire their office tools, they are really really good. I tried StarOffice it sucks big time. I used to believe that people use MS office because of monopolist tactics. That is absolutely wrong, it is superior products, and the competition work looks like high school projects.
Marco

October 1st, 2007 at 1:07 pm

@Velioncho

100% correct!
liquidboy

October 1st, 2007 at 1:41 pm

Microsoft are doing the right thing!

They have an awesome desktop application that churns out heaps of content.

The first step is to put that content in repositories online! NOT recreate the applications to be fully web based!

Microsoft are letting the competition build out their online applications, and when the competition finds finds the right mix for an online app Microsoft will re-create it and plug in ALL there online content to it!

BAM !!!! Microsoft is again ahead of the competition!

The most important thing is to get the content online!!! Microsoft realize that and are playing the right game!
Lafayette Howell

October 1st, 2007 at 2:16 pm

Like most curious, early adopters of technology who frequent the halls of TechCrunch, I have tried Google’s word processing solution. The reality is that people are not “always” online. What if you are working on your manuscript at the park or on the plane? You NEED to be able to work off-line, when in fact, when you need to collaborate or transmit, being online is required. Oh, and the Gdocs application is simply not ready for prime-time at this point.
Fabian Schonholz

October 1st, 2007 at 2:49 pm

I think MS is milking it for all is worth and at the end they will do an about face and embrace online more. If they are not, I will be disappointed. Even through I do not like or use MS products - my house is 100% combo Mac/Linux and work 100% Linux infrastructure - I still have respect for one of the richest companies around. Maybe my respect will go too!!
Princesc98

October 1st, 2007 at 4:24 pm

Although this is an interesting announcement, it sounds like file storage with just minor collaboration capabilities. I’ll check it out, but I’ve been using eXpresso for real time collaboration of Excel spreadsheets online. It has a lot of cool features including the ability to compare two spreadsheets side by side and a very detailed audit trail. Check it out at http://www.expressocorp.com.
Marc

October 1st, 2007 at 6:07 pm

Oh, I’m afraid this battle station is fully operational… muahaha
Alex Linhares

October 1st, 2007 at 7:03 pm

Microsoft Word has passed away. Time of death: 12.23AM.

Adobe has acquired Buzzword. Having one of the largest, and by the way, coolest, companies behind it will be the kiss of death to Microsoft Word.

With Buzzword, you get almost all word-processing functionality what really matters on your browser–with the addition of online collaboration. I was one of their first beta testers, receiving my invitation from Roberto Mateu on July 19th. I have Masters and PhD students writing up papers and theses with it, in real time collaboration, dispersed all around: Taisa is in the heart of the Amazon, Anne is in Harvard University, and Analize is in Curitiba, in the Brazilian South.

They have been adding features every month. It´s one of those things that, after you have it, you wonder how could you live without it. Soon, it will have the host of Adobe TrueType fonts, pdf support, offline functionality, etcetera. Yesterday it was alpha-geek only, but now it will spread like wildfire. No more emailing back and forth drafts and more drafts.

Adobe isn`t disclosing the financial part of the deal, but something like this just wouldn`t go for less than 100 million, perhaps some multiples of that. After this huge incentive, expect similar start-ups to jump in the bandwagon and, twelve months from now, spreadsheets and more sophisticated presentation programs. In the future, expect everything all the way from charting to equation editors. Microsoft Office “ultimate” (¿?) goes for USD679,00. The “student edition” goes for USD149,00. (By the way, Apple should just give up this space and bundle iWork into new machines.) Scoble mentions that MS will still have some “office” revenue stream, yet: “There is blood in the water even if only the early sharks can smell it.”

I`ve just replied to Tad Staley`s email, congratulating these folks.

As I wrote before, I´m almost feeling a little bit sorry for Mr Gates. But only almost. And only a little.

But, hey, maybe that cool Zune will make up for these lost sales?

From http://www.capyblanca.com/2007.....me-of.html
phenom

October 1st, 2007 at 8:31 pm

It is difficult to replace MSFT word.
http://vidsonly.blogspot.com
Don

October 2nd, 2007 at 8:09 am

I’m amazed that Google Docs continues to get such positive press as some sort of realistic competitor to Office. Google Docs is very, very far from being a viable business solution for anything but the most trivial of tasks. I’d say they have a decent hosted notepad, but that’s about it.

Have you ever actually tried to collaborate with Google Docs? They don’t even allow you to maintain position in a document while someone else is just viewing it. It’s truly unusable. Try it some time.

Let’s get past the fanfare and be realistic about the field of competitors in this space which does not include Google Docs.