For the past 20 years Microsoft has been pushing its Office productivity suite, which is a major reason why it has become so entrenched in the business environment. Each time an alternative has shown up, the software giant typically has adapted to these competitive threats by shifting its focus with ease.
However, with Massachusetts ousting Microsoft Office and governments around the world moving to open-source software, is the threat posed by open-source alternatives, such as OpenOffice and Sun's Star Office, becoming more serious? And should Microsoft be concerned?
"I think Microsoft is doing what any company in its position or in a similar position would do; when seeing competition, you are going to react to it," said Yankee Group senior analyst Laura DiDio. "But I don't think Microsoft is running scared. They are running smart, and they are right to be concerned."
One major Microsoft worry comes in the form of the latest report on open source from Forrester Research, which indicates that open-source software registered high marks among the 128 large North American enterprises that the firm surveyed in early 2005.
A total of 56 percent of the respondents said they already had tried open-source software and most were highly satisfied with the results. Moreover, an additional 19 percent of the survey's respondents said they intend to use open-source software at some point in the future. In fact, Forrester said that the 26 percent of companies with no plans to use Linux or open source are now the exception.
Forrester senior analyst Michael Goulde thinks customers have higher expectations for Microsoft products, so it's harder for the software giant to score well on customer-satisfaction surveys. "Open source today is expected to be 'good enough,' and, most of the time, open-source products meet that expectation or exceed it," Goulde said. "When you're paying as much as you pay for Microsoft, by comparison, you expect a lot more than good enough."
In theory, one might expect the free OpenOffice and low-cost Star Office to be taking major bites out of Microsoft's market share. But Forrester's survey indicates just 13 percent of the enterprises polled said they were using OpenOffice, and only another 7 percent said they would be using OpenOffice in the future.
Goulde thinks he knows the reason behind the lack of traction for open-source alternatives to Microsoft Office. "Moving any significant portion of the Microsoft Office base toward OpenOffice is nearly impossible because of user inertia that stems from reluctance to change and reluctance to learn something new," Goulde observed. "OpenOffice would have to require virtually no retraining, be 100 percent keystroke compatible, be 100 percent file format compatible, and would have to be compatible with the features any particular customer uses."
The problem is that, although no one uses all the features that are available in Microsoft Office, everyone uses a slightly different subset, Goulde said. "That makes it hard for OpenOffice to target the right set of features."
At this point, said DiDio, the organizations achieving the greatest total cost of ownership (TCO) and return on investment (ROI) with open source are those that have done their due diligence, understand the requirements and costs involved, and can do a lot of their own management and remediation without relying on other organizations for technical service and support.
For his part, Goulde believes that businesses should not hesitate to bring in Linux or open-source software if it meets their needs. But companies will need to invest the time and resources to learn about open-source software. The familiarity that many business workers already have with Microsoft products proves to be a major selling point.
Among those companies not using open-source software, 67 percent of the respondents to Forrester's survey say they do not have the skills or familiarity required to move forward with open source.
Goulde also believes that it might be possible for customers to have outside support for open-source products and save in TCO over Microsoft as more support options for open source become available. But, he said, it depends on the level of complexity, the scope of deployment, the number of users, and other factors that ultimately determine whether there's TCO savings.
Eying Open-Source Flexibility
Many in the open-source community say that TCO is not necessarily the defining issue for all deployments because of the other benefits that open source offers.
"We do see TCO as a central question," said OpenOffice community manager Louis Suarez-Potts. And when governments, such as the city of Munich or Vienna, move over to open source, he explained, they are looking very closely at the TCO issue. "But is cost all that much of a factor, and, if so, then when does it become a factor?" he asked.
In the end, even if the TCO in some cases might turn out to be higher than what it costs to use Microsoft software, "open source is still a better solution because enterprises will derive other benefits in no longer operating in a closed environment," Suarez-Potts thinks. "So, in addition to cost, enterprises also must consider the flexibility of open source from an end-user perspective as well as the management benefits."
Goulde advises companies not to expect cost savings to be the key factor in making open-source investments. Yet Forrester's survey indicates that "the highly touted advantages of open source -- especially the ability to view and modify the source code -- are not seen as important by most large enterprise respondents."
So what should companies be looking for that they cannot get from competing Microsoft products? What customers get with open-source products is more flexibility and less vendor dependence or lock-in, Goulde said.
Suarez-Potts does not believe that Microsoft's entrenchment is nearly as universal as it is often made out to be. "Open source is substantially taking root very strongly in developing nations and in many other places which have very thriving and powerful economies," Suarez-Potts said.
DiDio said that Microsoft needs to be most concerned about those emerging markets in which it does not have such an embedded infrastructure, and where low-cost, high-volume strategies are the norm. "Emerging countries don't have the same requirement for advanced functionality and therefore go for the baseline stuff with a low entry point," DiDio said. "That's a concern for Microsoft, and is why it is launching 'Windows light' and 'Office light' versions for countries such as Thailand."
Microsoft's value proposition is certainly a major part of U.S. corporate culture, but it remains to be seen whether it can work beyond this narrow perimeter, Suarez-Potts said. But the OpenOffice community manager also believes that Microsoft Office is seen more as a United States tool rather than as a tool of the world.
"It's not that open source has taken on an anti-American strategy, but rather it is now seen as a better way to develop local ecologies and technologies," Suarez-Potts said. "It's all about how the open-source approach serves the technology needs of countries around the world, where Microsoft is just one competitor among many."
However, Goulde noted that piracy remains a big issue in the emerging markets of the Asia-Pacific. "I'm not sure they'll even honor open-source licenses there."
Addressing the Disability Issue
The disability issue was recently raised in government hearings associated with the move by the State of Massachusetts to the OASIS OpenDocument standard, with which OpenOffice is entirely compliant, while Microsoft Office is not.
DiDio noted that there are a lot more embedded features in Microsoft Office and Windows for physically challenged workers, which suggests that disabled government workers in the state of Massachusetts, for example, might end up sticking with Microsoft Office. "This will set up two environments, which will cost more to manage and integrate."
Suarez-Potts agrees that the OASIS standard currently does fall short when it comes to accessibility. Although this is not strictly an open-source problem, OpenOffice and the OASIS organization responsible for the OpenDocument standard are addressing it.
"It has to be taken very seriously and we are already working on it," Suarez-Potts said. The OpenOffice community manager also noted that the State of Massachusetts will not be moving to open source until 2007, which gives open-source developers plenty of time to add the requisite functionality.
"Open-source software has to address access as a very high priority," Goulde agreed. "As long as our society continues to underfund programs for the disabled and continues treating them as second-class citizens, availability of technology will always be constrained. Open source is a way to address this, but accessibility has to be there."
Although Massachusetts is ousting Microsoft Office and governments around the world are embracing open-source software, clearly open-source alternatives to Microsoft Office have a long way to go.
"Open source remains an issue for Microsoft," said Gartner vice president David Smith. "But I think the biggest threat is from Linux."