Tomorrow in San Francisco, Microsoft’s new Office Division President, Kurt DelBene, is expected to announce the next version of the company’s online services for businesses. This is a great chance to undo the botched Office Web Apps launch from earlier this year, and instead introduce a real Microsoft alternative to Google Docs.
This is a critical initiative for Microsoft. Office is the company’s second largest product, with revenues of about $13 billion per year and profit margins that top 70%. Google Docs can’t touch it on a feature for feature basis, but it has most of the features that most people use, dramatically undercuts Office on price, and may cause businesses–especially smaller businesses–to question why they need to spend a couple hundred bucks on the full Office suite for all their employees.
Office Web Apps was supposed to be Microsoft’s answer to Google Docs. It lets users read and write certain Office files, like documents and spreadsheets, with a browser.
But the launch of Office Web Apps was a mess. The first version of the product came out in May at the same time as Office 2010. But it was only for enterprises who had bought and installed the latest version of SharePoint Server. (For the uninitiated, SharePoint is a mish-mash product that does about 10 different things, but it’s most often used for sharing documents and creating intranet sites.) So, not really a cloud solution at all.
In July, Microsoft followed up with a free version for consumers, delivered through Windows Live SkyDrive and Hotmail. It suffers from classic Microsoft version one disease, with weird user experience decisions that make it almost impossible to use. It launched without a lot of expected Office features, like the ability to create Excel charts. You sometimes have to open a document twice, once for reading, once for editing. To edit, you have to store files in a format that was only offered beginning with Office 2007. Instead of listing all your files and folders in a simple classic Windows-like fashion, it tries to think for you and lists them in arbitrary date-based categories, like “files accessed in the last week.” And on and on. (You don’t have to take my word for it, try it yourself. Good luck!)
In other words, absolutely unsuitable for business use.
But there’s a third piece of the puzzle that never got launched. Microsoft offers a service called SharePoint Online. It’s SharePoint in the cloud, hosted by Microsoft, for businesses. (It’s part of the awkwardly named Business Productivity Online Suite, or BPOS.) But SharePoint Online doesn’t include Office Web Apps.
In other words, in the one place where Microsoft needs a direct competitor to Google Docs–hosted services for businesses–it doesn’t have one.
This is probably what Microsoft is going to announce tomorrow. Given how crummy the consumer version of Office Web Apps is, it wouldn’t surprise me if Microsoft has something a little more extensive planned. I’d expect more Office features and perhaps more apps, delivered with a much cleaner user experience.
It will almost certainly be a subscription service. But Microsoft can’t match Google’s price–$50 per year for a Premium level of service that includes Docs plus Gmail plus a bunch of extra services–without hurting the traditional Office business. This is a tricky transition, and the new Office leader DelBene has his work cut out for him.