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Microsoft Pri0

Welcome to Microsoft Pri0: That's Microspeak for top priority, and that's the news and observations you'll find here from Seattle Times reporter Sharon Chan.

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May 10, 2010 5:39 AM

Office 2010: Microsoft makes a free version of its cash cow

Posted by Sharon Chan

office2010prof.jpgIn case you missed it, this story ran in Sunday's Seattle Times on Office 2010. When Microsoft launches its latest business and personal software suite Office 2010 on Wednesday in New York, it will introduce a free version, Office Web Apps, to compete with Google. I will be covering the launch event in New York. Follow my updates here at Pri0 or via Twitter at

In the beginning, there was word processing.

Then, simply, Word.

Spreadsheets became Excel. Presentation software, if it was ever known by such a name, was simply PowerPoint. Long before Google's preeminence in search, Microsoft dominated business and personal software with a suite known as Office.

The company launches its latest version, Office 2010, on Wednesday in New York â€" and the stakes couldn't be higher.

The lucrative franchise is threatened by a changing market spouting a four-letter word: free. The biggest threat comes from Google, specifically Google Docs, Web applications accessible from any computer.

Because of Google, Microsoft has been forced to make a free ad-supported version called Office Web Apps.

Google's software is unlikely to depose Office, especially among heavy business users who write reports, draw up corporate budgets and put together sales presentations. But Office 2010 does represent a slow tipping of the entire technology industry, from a PC world Microsoft long has dominated to a cloud-computing world, where software roams free on the computer, phone, tablet and television, and the old ways of making money are changing.

"We think it's actually an opportunity for us," said Stephen Elop, president of Microsoft Business Division, which makes Office. "We have an opportunity to draw in many, many people who today are not engaged in the Office experience, or have not paid for software along the way, or are on very old software."

Wednesday's event at NBC Studios in New York will mark the first day business customers can buy copies of Office 2010 that gets installed on PCs. The software will start selling in stores to small businesses and consumers sometime in June. The free Office Web Apps also will be available to consumers in June.

Microsoft's challenge

Free is not a part of Office's history. The Business Division, whose chief product is Office, brought in $19 billion in sales in fiscal 2009, more than a third of Microsoft's $58 billion in sales for the year. It generated more than half of the company's operating profit â€" $12 billion of the overall $20 billion.

But Microsoft's ability to sustain these numbers is being challenged by the new way people use technology.

"As the world goes increasingly more and more mobile, the way people want to access and use applications is increasingly shifting to the Web," said Sarah Friar, an analyst at Goldman Sachs who follows Microsoft. "Google becomes the face of that beast, but I think it's a broad industry shift, not just Google, that is bringing Microsoft around to this."

Instead of selling copies of Office, the company may have to find other revenue streams, including advertising to underwrite free software.

Much is riding on the company's next steps. Microsoft estimates 500 million people use Office, many of them still chugging away on Office 2003 or even older versions. About half the users are believed to have paid for it. The others have not, many of them using pirated versions.

Microsoft is less worried about piracy, more worried about people who choose Google Docs instead.

Four years ago, Google began offering the stripped-down Web-based word-processing, spreadsheet and presentation software to compete with Office.

Google Docs saves each file on a Google server so people can access it from any PC or device rather than saving it to a thumb drive, e-mailing it back and forth as an attachment or physically being at a specific computer to open a file.

The public version of Google Docs is free to individuals, and Google sells the software to businesses for $50 per user each year in a suite called Google Apps. The paid version has more security, privacy controls and customer support, and it runs on a network with guaranteed service levels. Google says that, combined, more than 25 million people are using the free and paid versions.

"The way people work today is not reflected in the tools they have at their disposal," Google spokesman Andrew Kovacs said. "Office was built 20 years ago for someone sitting at a desk on their own. ... Google Docs, launched four years ago, it was about collaboration."

Chris Vander Mey, senior product manager at Google, called Office a great tool. "Every business should have two or three copies," he added. "We don't think everyone needs it. It's like Photoshop â€" not everybody needs it."

Spreading competition

To counter Google Docs, Office Web Apps will offer more features and what the company claims is a better visual presentation than its competitor. But Office Web Apps will not have all the features of Office 2010, which is being priced from $119 to $499, depending on the version.

"We've had a long history of lots of competition," said Chris Capossela, senior vice president of Microsoft Business Division. "We have to focus on a really great product our customers will love. We think that if we do that, we'll continue to be the leader."

That competition has spread on the Web. A month ago, Microsoft launched Docs for Facebook, building a free Web-based version of Office that works inside the social network. Microsoft also recently laid claim to the URL

Capossela said the Office team has been building its new version since Office 2007 came out in 2006, with a focus on working across the PC, the browser and the phone. Seven million users have downloaded the test version of the software, the company reports.

The free version of Office Web Apps will have advertising; Google says it has no plans to add ads to Google Docs.

New Office features

As always, Microsoft has put much effort into building new features for the software.

Office Web Apps, for instance, allows users to create, edit and share Office docs with people who have Office and those who don't. Two people could simultaneously edit the same spreadsheet, Word document or PowerPoint presentation from different locations through a PC, the Web or a Windows Mobile phone.

"It's nice to be able to walk to any PC connected to the Internet and you can use Office Web Apps to create docs. You can round-trip the files from the PC to the phone to the browser," Capossela said. "Nothing is gone. The pictures, footers, headers will all be there."

The Office team also built a new social-network feature into Outlook, the Outlook Social Connector, so users can pull up contact information from Facebook and LinkedIn without leaving Microsoft's e-mail software.

A new video-editing feature was added to PowerPoint, and the new Word has a photo-editing feature.

Google dismisses the new Office features. "We're not about new features," Vander Mey said. "We're about new behavior."

Embracing the cloud

Observers say an Office that embraces the cloud is just the beginning for Microsoft. As Chief Executive Steve Ballmer has said, "we're all in" when it comes to the cloud. Microsoft has built large data centers in Houston, Chicago, Ireland and other locations to launch cloud services.

In January, the company launched its cloud-computing platform, Azure, which is courting software developers to build Web-based applications on a Microsoft-hosted platform.

The big question now is how the move to the cloud will affect the Office sales.

"Not all of it is going to be at risk, but you could see $1 billion being at risk over a couple-year period," said Goldman Sachs' Friar.

The customers Microsoft stands to lose most are consumers who now buy Office for personal use. Friar estimates that Office made $1.8 billion in fiscal 2009 from consumers. Consumers who already are adopting cloud-based software such as iTunes and Facebook are more likely to move to free Web versions than business customers.

Business customers, who Friar estimates make up 90 percent of Office customers, are unlikely to immediately make the jump, given that the free Web version will have online advertising, less security and privacy, no guarantees that the service would always work, and far fewer features than the PC version. These customers sign long-term contracts with Microsoft, paying an annual fee per worker with automatic upgrades to the latest version. It's slower, steadier income.

They eventually may move to the cloud, and Microsoft has to figure out how to bridge the PC past and the cloud future.

"It's going to force them to think through very different business models from how they get paid today," Friar said.

Sharon Pian Chan: 206-464-2958 or Follow me on Twitter @sharonpianchan

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July 13, 2009 6:13 AM

Microsoft will offer Office docs online for free

Posted by Sharon Chan

As Google does with Google Docs, Microsoft will make free Web versions of Word, PowerPoint, Excel and OneNote available next year.

Stephen Elop, the president of Microsoft's Business division, is dropping that and some other details about Office 2010 in a keynote speech at Microsoft's Worldwide Partners Conference in New Orleans this morning.

Office 2010, the next version of Microsoft's productivity software, will launch in the first half of 2010. Starting today it will be available for technical preview by invitation only to partners at the conference, and long-time enterprise customers will make the invite list. SharePoint 2010, Visio 2010 and Project 2010 are also going to be available as part of a technical preview.

The company will also start offering Microsoft-hosted versions of Office software, as it does now with applications such as Microsoft Outlook. Business customers will also be able to buy Web-enabled versions so workers can access Office applications online as they would with Microsoft Outlook Web Exchange.

Janice Kapner, senior director of communications of Microsoft's Business division, said the new version of Office will have the "ability to deliver the best productivity experience across the PC, mobile phone and the browser."

In other news, the "ribbon," the hate-it-or-love-it graphical user interface that made its debut in Word 2007, will become a part of the rest of the Office software line.

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May 12, 2009 11:45 AM

Coming soon to a desktop near you: Microsoft's Office The Movie

Posted by Sharon Chan

"There are 5 billion working people in the world. In 2010 their hero will arrive."

Those are the opening lines to an online video trailer for Microsoft Office 2010. The company is now taking requests for the technical preview, set to begin in July, which you can sign up for at the Microsoft site "Office 2010 The Movie."

Like a trailer for a real movie, it doesn't say much about the plot of the movie, I mean, the software.

Dennis Liu, credited as the director of the trailer, sounds like a technology agnostic guy. He first gained notice last year for making a music video on the Mac. In this interview with the Unofficial Apple Weblog, he says he's a Mac fan. The video is set to the song "Again and Again" by Bird and the Bee, which has been viewed 1.3 million times. Here's that video:

And, check out this other funny short film he did called "Pretend to Work" using Microsoft Office for Mac:

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May 1, 2009 2:03 PM

Microsoft's Ray Ozzie talks about cloud computing and heralds this a golden age

Posted by Sharon Chan

Ray Ozzie, Microsoft's chief software architect, sat down for a question and answer session at the Technology Alliance lunch today at the Westin in downtown Seattle.
Ed Lazowska, a computer science professor at the University of Washington, asked questions and took a few from the audience. Ozzie talked about the cloud, netbooks and took a stroll down memory lane to describe the first Internet-ish system he used in 1974.

(Photo credit: Microsoft, 2008)

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April 15, 2009 3:33 PM

Microsoft Office shipping in first half of 2010

Posted by Sharon Chan

Microsoft plans to ship Office in the first half of 2010. The company announced the shipment today as part of the launch of an Exchange beta.

Office, and Office spinoffs like Sharepoint Server, Visio, Project, will enter a technical preview in the third quarter of this year and ship next year. We can expect the products to be available both as software that lives locally on your computer and servers as well as an online service that's hosted by Microsoft, also known as cloud-based service.

As for the latest incarnation of Exchange, it will include a feature called MailTips to warn you against e-mailing the details about the weekend bachelor party to your entire company's distribution list.

MailTipsLarge_web.jpgGo here to download a public beta of Exchange 2010.

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April 2, 2009 2:45 PM

Microsoft news roundup: Ad campaign in works for Microsoft search; Office on iPhone?; Inside Google's data centers

Posted by Benjamin J. Romano

Advertising Age reports that JWT, which has been getting more business from Microsoft of late, has landed an $80 million to $100 million advertising campaign for the company's Internet search service, which is expected to undergo a major rebranding later this year. The story says the campaign is expected to begin in June. Microsoft's search team had some April Fool's fun Wednesday, poking at its branding troubles with a post announcing the debut of "MSN Windows Live Search on"

Stephen Elop, president of the Microsoft Business Division, indicated an Office application that would let Apple iPhone users edit documents could be in the works. Asked at the Web 2.0 Expo today about a mobile edition of Office for the iPhone, Elop said, "Not yet -- keep watching," according to this eWeek story.

Continue reading this post ...

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February 24, 2009 6:15 AM

Microsoft Strategic Update: Ballmer tells Wall Street more dramatic cost cutting would be 'imprudent'

Posted by Benjamin J. Romano

With Microsoft's Redmond campus largely emptied out for the winter holidays, CEO Steve Ballmer crunched the numbers on the proper level of spending for his company against the current economic climate, which he has repeatedly referred to as a "reset" rather than just a recession. Ballmer said his own estimates for the weakness and duration of the downturn tend to be more severe than those of other business leaders he meets.

With that in mind, he settled on $27.5 billion of operating expenses -- a level the company aims to hold relatively steady through the current fiscal year, which ends June 30, and during its 2010 fiscal year. Ballmer made clear to financial analysts meeting in New York this morning for the company's annual strategic update that cutting back even more significantly -- say to $20 billion -- would be "imprudent."

"I think this is right," Ballmer said.

That should give some comfort to those wondering if the modest layoffs Microsoft announced last month were the beginning of a more significant reduction. Wall Street analysts and investors are pressuring companies in every industry to continue cutting costs as sales and profits slow dramatically.

The strategic update call just came to an end. Ballmer gave a detailed look at seven major business areas for the company. Check back here later this morning for more details.

Update, 7:50 a.m.: As he told Congressional Democrats earlier this month, Ballmer said Microsoft's corporate strategists have been evaluating past downturns -- particularly those driven by "deleveraging." The team read company annual reports from 1927 to 1938 to determine who did a good job managing through the Great Depression. "RCA, God rest them in peace, became our role model," Ballmer said. The company was able to dominate the television business because it continued to invest during bad times, he said.

Then he broke down how Microsoft plans to invest.

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Comments | Category: Advertising , Apple , Enterprise , Financial , Games & entertainment , Google , Microsoft layoffs , Mobile , Office , Online services , Open source , Search , Server and tools , Steve Ballmer , Strategy , Tech Economy , Windows , Windows 7 , Windows Azure , Windows Mobile , Xbox 360 , Yahoo acquisition , Zune |Permalink | Digg Digg | Newsvine Newsvine

January 14, 2009 2:07 PM

Speculation swirls on timeline for next version of Microsoft Office; test version of Web apps due this year

Posted by Benjamin J. Romano

With documentation and early code going out to select testers this week, another Microsoft guessing game is gaining favor: When will the company ship the next version of Office, known as Office 14?

Earlier guesses had the company aiming for a dual Office-Windows release, as it has in the past. But speculation today points to a 2010 Office release. (Windows 7 is expected by many pundits to ship sometime later this year -- despite Microsoft's official position that January 2010 is the target.)

I had a chance to ask Justin Hutchinson, group product manager for the Office client team, about the schedule for the product last Thursday at the Consumer Electronics Show.

Q: Is there any kind of goal to have Office in step with Windows 7 as Microsoft has done in the past?

Continue reading this post ...

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October 28, 2008 9:00 AM

PDC: Microsoft to sell Office as a Web service, competing with Google Docs

Posted by Benjamin J. Romano

LOS ANGELES -- In addition to the online services components of Windows 7, Microsoft is announcing plans to provide online versions of its other highly lucrative products: Word, PowerPoint, Excel and OneNote that will run in a Web browser.

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October 15, 2008 12:51 PM

Uptight Seattleite's kind words for Microsoft Word ... sort of

Posted by Benjamin J. Romano

One of my favorite features in the Seattle Weekly is Uptight Seattleite, an advice column written in the voice of a stereotypical Emerald City denizen. Occasionally, Uptight fields a question about technology, as is the case today.

"Dear Uptight Seattleite,

"God, I'm so irritated. I just want to paste some text into Microsoft Word, but it insists on trying to reproduce all formatting and hyperlinks and pictures and anything else I may have incidentally highlighted. Why does Word do so many things I don't want it to, and is unable to do the very simple things I do want it to?

"Word Smitten"

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October 6, 2008 1:36 PM

Microsoft business exec Elop shares newcomer's observations

Posted by Benjamin J. Romano

Erika Schultz / The Seattle Times

Stephen Elop, photographed in May, shared his observations today after 10 months at the helm of the Microsoft Business Division.

Ten months into his job as president of Microsoft's $19 billion business division, Stephen Elop has come to some conclusions about his new employer. It is a tenacious company, relentlessly self-critical and full of people who believe their jobs can make a major impact on the world. He expanded on those ideas in front of a Seattle audience this morning.

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October 6, 2008 11:36 AM

Microsoft's vision for business intelligence for everyone, even in 'Halo 3'

Posted by Benjamin J. Romano

Microsoft wants to "democratize" business intelligence software so that everyone who does office work can know when they're missing their quarterly targets, not just the 10 to 25 percent of employees who do now. At its business intelligence conference in Seattle today, executives laid out their strategy to expand usage of this category of software.

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October 3, 2008 7:32 AM

Next week: Microsoft business intelligence conference a coming out for DATAllegro

Posted by Benjamin J. Romano

Microsoft will tout its recent buy, DATAllegro, at a business intelligence conference beginning Monday in Seattle.

Microsoft announced the acquisition of the high-end database company in July during its Financial Analyst Meeting. The acquisition was viewed as a broadside on Oracle in the high-end database market. DATAllegro makes a data warehousing appliance, which combines multiple database servers with hardware.

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September 24, 2008 1:30 PM

Former Microsoft exec Raikes giving big to Nebraska comp science program that carries his name

Posted by Benjamin J. Romano

Jeff Raikes, the longtime Microsoft executive who resigned earlier this year to take the helm of the Bill & Melinda Gates Foundation, is boosting the computer science program at the University of Nebraska-Lincoln.

Raikes is a proud Nebraska native, whose family still runs a farm there. He'll talk about it on any occasion, such as over USDA Prime steaks at Daniel's Broiler.

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August 28, 2008 10:04 AM

What words would you add to the Microsoft spell-checker?

Posted by Benjamin J. Romano


Mike Calcagno, general manager with the Natural Language Group for Office at Microsoft, and members of his team identify and vet new words to add to the spell checkers that ship with Office in many different languages.

After today's story on the team at Microsoft that makes the spell-checker, people wrote in to share the words they wish it would include and their favorite spell-checker corrections.

A friend who works in the sciences said it's difficult to trust the spell-checker in her field. "You think Bromodichloromethane or 4-Methyl-2-Pentanone are in there? Or whenever we use borehole the suggested correction is brothel..."

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August 14, 2008 2:06 PM

Latest versions of Office spell checker recognizes 'Obama,' doesn't change to 'Osama'

Posted by Benjamin J. Romano

New York Times technology writer David Pogue published a reader question in his blog and weekly e-mail today:

"Q: David: I've noticed this for a year, and have not been able to get Microsoft to change it: Type 'Obama' or 'obama' in Microsoft Word or Outlook, and the spelling checker recommends 'Osama' as the corrected spelling. How could this continue month after month, especially now that Mr. Obama is likely to be the Democratic candidate for president? Hope you can connect with appropriate folks at Microsoft and get this changed."

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