Microsoft Office 2010 Will Rule, Analysts Say

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Microsoft was never exactly in danger of losing the office software market to new rival Google, but Wednesday's release of Microsoft Office 2010 and related products will ensure that Microsoft remains the top choice of enterprise IT executives, analysts say.

Microsoft Wednesday announced worldwide availability of the 2010 editions of Office, SharePoint, Visio and Microsoft Project, along with new Web-based capabilities designed to stem the momentum Google has achieved in the cloud software market.

Google Apps vs. Microsoft Office

For businesses looking to save money and relieve pressure on its IT staff, Google Apps will remain a viable option, analysts say. But so far, few companies are choosing Google over Microsoft and enhancements to Office may make them even less likely to do so.

"In the business space, it's hard to see what Google's advantages are," says Forrester analyst Sheri McLeish. "It's really, at this point, Google's turn to try to woo away Office customers. To date, we haven't seen from large businesses a strong desire to move away from Office. It meets their needs, even though it is costly from a licensing prospect."

Google's had great traction with Gmail, McLeish notes, and has released many updates to Google Docs and other office tools in recent weeks that close some of the functionality gap between Google and Microsoft.

But as of today, only 4% of businesses are supporting the enterprise version of Google Apps, whereas 81% of businesses support Microsoft Office 2007, 57% support Microsoft Office 2003 and earlier versions, and 10% support the open source OpenOffice. While Google gets almost all the media hype surrounding cloud-based office tools, Forrester's survey has Google barely ahead of Zoho, another online office suite, which is supported in 3% of businesses. The numbers are based on 115 enterprises and small-to-midsize business customers surveyed in the first quarter.

Rebutting Google Docs

Office 2010 counters some of Google's innovations in Web-based applications and concurrent editing of documents, says Burton Group analyst Guy Creese. Tight integration between Office and SharePoint will make it easier for enterprise users to collaborate, he says.

"Office 2010 is no longer just the productivity suite. It's a full-blown collaboration system now," Creese says.

Microsoft is still in danger of scaring customers away with higher prices and punitive licensing terms, however. For businesses that don't need all the capabilities of Microsoft Office the $50 per user per year price of Google Apps will remain very attractive, Creese says.

"If someone is looking at Google Apps to save money, the new version of Office is not going to change that one iota," he says.

Part of Microsoft's value proposition is the suite of Office Web Apps, which let users store, edit and share documents online. Office Web Apps will now be available to all "Office volume licensing customers," or through a separate subscription, Microsoft said.

Google is making its own marketing push this week with multiple blog posts touting the capabilities and low cost of Google Apps. In one such post, titled "Upgrade Here," Google tries to convince customers to use Google Docs in addition to Microsoft Office rather than as a full replacement.

"This week Microsoft will take its Office 2010 suite out of beta. If you're considering upgrading Office with Office, we'd encourage you to consider an alternative: upgrading Office with Google Docs," writes Google enterprise product management director Matthew Glotzbach. "Of course, you probably already own Office 2003 or 2007 (or maybe Office 2000?), and there's no need to uninstall them. Fortunately, Google Docs also makes Office 2003 and 2007 better. For example, you can store any file – including Microsoft Office documents – in Google's cloud and share them in their original format (protected, naturally by Google's synchronous replication across data centers). Plus, in the coming months, Google will enable real-time collaboration directly in Office 2003 and 2007."

Google's Challenge

Google's pitch, that it can be both a replacement for Microsoft and a Microsoft add-on, reflects the reality that the vast majority of businesses have already installed Microsoft Office and would find it difficult to rip their deployments out. Google's decision to run Gmail directly in the Microsoft Outlook client is a testament to the fact that business users like Office, McLeish says.

But with Microsoft increasingly offering online options, businesses looking for a hybrid approach may find it easier to go with just one vendor. While Microsoft's Web applications don't have the rich capabilities found in the packaged software version, Creese says "the visual fidelity is very much higher than it is in Google Apps. If you bring up a Word document in a browser it looks exactly the same as it does in the regular Microsoft Office."

For most businesses that adopt alternatives to Microsoft Office, they will simply be used as complementary tools, not replacements, Forrester found in its survey.

One-third of businesses plan to upgrade to Office 2010 within a year, and two-thirds plan to do so within the next two or three years, McLeish writes in a blog post. The decision for many is a no-brainer because their current licenses contain provisions for the upgrade to 2010, and the Web-based capabilities make the new version more attractive, she writes.

"With Office 2010 workers at last have the ability to access, edit, and share their Office content anywhere with an Internet connection by saving files directly to Web Apps for business or SharePoint 2010," McLeish writes. "Microsoft gains here by offering more options for access to its apps, whether online or offline, web-based or desktop-bound."

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