Big tech does small biz
Sunday, 23 September 2007
Rachel Rosmarin,
Spreadsheets, calendars and presentations might feel like drudge work to the cubicle-bound, but they pay Microsoft's bills--Office accounted for around 75% of the company's fiscal 2007 net income. Half a billion desk jockeys use Microsoft's Office software suite to do their jobs.
But Microsoft's prized, and thus far reliably growing profits from Office could begin shrinking if IBM, Google, Yahoo! and Sun Microsystems have their way. Each has launched or purchased an application that is given away for free or hosted online--concepts Microsoft has been slow to stomach--to compete with Bill Gates' behemoth.
Stripped-down versions of "productivity software" have been available for free on the Web for more than a year. But while competitors are gaining ground, Redmond doesn't have too much to fear just yet.
IBM has the latest offering. The free package, Lotus Symphony--launched Tuesday--has a word processor, spreadsheet and presentation software. Based on OpenOffice, an open-source product with a following among rogue techie-types, IBM's endorsement of the system may cause some larger companies, including clients of IBM, to sit up and take notice.
IBM's suite doesn't offer it all--it lacks a calendar, e-mail, and online collaboration tools. The company doesn't claim Lotus Symphony will match Microsoft feature-for-feature. "Microsoft has the most sophisticated, most complete set of features," IBM Software Group Senior Vice President Steve Mills said during a press conference Tuesday.
IBM and Google know that not every employee and every company finds all those features to be worth the cost of an Office license, which can cost hundreds of dollars per employee. Desktop applications like IBM's, or Web-based versions like Google's, save money in the short-term with non-existent purchase prices, but can keep adding value by eliminating the need to pay for an upgrade every time Microsoft puts out a new version.
Though there may be drawbacks, limited free support, advertising and unplanned downtime, for many cash-strapped start-ups, the trade-off is worth it. Free applications often run on all major operating systems--Windows, Macintosh and Linux. Legions of nomadic start-ups with employees working from home or even coffee shops rely on Web-based software like Google Docs.
Mid-sized companies switching to free software may incur less obvious costs. Re-training employees and working with programmers to customize the new software to match previously made tweaks in Microsoft's products can add up.
Most large companies will find these trade-offs unacceptable. The applications do not provide adequate archiving options to meet legal demands, nor do they guarantee the type of security requirements.
Even so, Google continues to make overtures to large businesses. On Sept. 10, it announced that software consultancy Capgemini would support Google Apps Premier Edition, which costs $50, when it works with clients on software integration. The company hasn't said which large businesses have signed up, though Google often says a hundred small businesses begin using Google Apps every day.
None of these efforts have hurt Microsoft yet--it still enjoys a 98% share of the dollars spent on productivity software. But as business switch handfuls of employees over to free software to avoid paying upgrade or licensing fees, Microsoft may find it difficult to keep increasing the total dollars spent.
..............
Internet
Spreadsheets, calendars and presentations might feel like drudge work to the cubicle-bound, but they pay Microsoft's bills--Office accounted for around 75% of the company's fiscal 2007 net income. Half a billion desk jockeys use Microsoft's Office software suite to do their jobs.
But Microsoft's prized, and thus far reliably growing profits from Office could begin shrinking if IBM, Google, Yahoo! and Sun Microsystems have their way. Each has launched or purchased an application that is given away for free or hosted online--concepts Microsoft has been slow to stomach--to compete with Bill Gates' behemoth.
Stripped-down versions of "productivity software" have been available for free on the Web for more than a year. But while competitors are gaining ground, Redmond doesn't have too much to fear just yet.
IBM has the latest offering. The free package, Lotus Symphony--launched Tuesday--has a word processor, spreadsheet and presentation software. Based on OpenOffice, an open-source product with a following among rogue techie-types, IBM's endorsement of the system may cause some larger companies, including clients of IBM, to sit up and take notice.
IBM's suite doesn't offer it all--it lacks a calendar, e-mail, and online collaboration tools. The company doesn't claim Lotus Symphony will match Microsoft feature-for-feature. "Microsoft has the most sophisticated, most complete set of features," IBM Software Group Senior Vice President Steve Mills said during a press conference Tuesday.
IBM and Google know that not every employee and every company finds all those features to be worth the cost of an Office license, which can cost hundreds of dollars per employee. Desktop applications like IBM's, or Web-based versions like Google's, save money in the short-term with non-existent purchase prices, but can keep adding value by eliminating the need to pay for an upgrade every time Microsoft puts out a new version.
Though there may be drawbacks, limited free support, advertising and unplanned downtime, for many cash-strapped start-ups, the trade-off is worth it. Free applications often run on all major operating systems--Windows, Macintosh and Linux. Legions of nomadic start-ups with employees working from home or even coffee shops rely on Web-based software like Google Docs.
Mid-sized companies switching to free software may incur less obvious costs. Re-training employees and working with programmers to customize the new software to match previously made tweaks in Microsoft's products can add up.
Most large companies will find these trade-offs unacceptable. The applications do not provide adequate archiving options to meet legal demands, nor do they guarantee the type of security requirements.
Even so, Google continues to make overtures to large businesses. On Sept. 10, it announced that software consultancy Capgemini would support Google Apps Premier Edition, which costs $50, when it works with clients on software integration. The company hasn't said which large businesses have signed up, though Google often says a hundred small businesses begin using Google Apps every day.
None of these efforts have hurt Microsoft yet--it still enjoys a 98% share of the dollars spent on productivity software. But as business switch handfuls of employees over to free software to avoid paying upgrade or licensing fees, Microsoft may find it difficult to keep increasing the total dollars spent.
..............
Internet