Microsoft plans to deliver Office 2007 later this year in a lineup of seven suites meant to deliver its most sophisticated business customers new features at higher prices, while still keeping users of its core word processing and spreadsheet apps in the fold.
Officially called 2007 Microsoft Office, the new productivity suite will add tools for routing documents around companies, publishing files to workgroups, and instant-messaging at the office. to the most popular edition of the software, which appears on the desktops of most business computer users, Microsoft said on Wednesday. Microsoft is also adding a new, top-end edition of the product that includes its Groove and OneNote collaboration apps, and introducing a new Web site design tool called SharePoint Designer, to replace its aging FrontPage software. Microsoft has also revamped the user interface of Office components such as Word, Excel, and PowerPoint in version 2007 to make commonly used features easier to find.
Office 2007, previously code-named "Office 12," will replace Microsoft's current Office 2003 suite, which will be three years old when the new product arrives. It's an important release for Microsoft—during its fiscal second quarter ended Dec. 31, Office and other "information worker" products contributed one quarter of the company's $11.8 billion in revenue, and 45% of operating profits. Microsoft has been broadening the capabilities of its Office to reflect workplace trends such as increased collaboration among employees of different companies, and large numbers of traveling workers.
To that end, Microsoft has renamed the current Office suite called "Professional Enterprise Edition" as "Office Professional Plus" in the new version, and added the ability to perform complex routing of files around teams of workers, when it's used with Microsoft's upcoming SharePoint Server 2007. Pro Plus will be the company's "workhorse enterprise suite," when version 2007 arrives, says John Cairns, a senior director in Microsoft's information worker group. "That's what most people will use, and what we think will get the most sales going forward," he said. A new edition of Office called the Enterprise edition, includes new versions of the Groove collaboration software Microsoft acquired when it bought Groove Networks last year, and a new version of OneNote, a note-taking application.
Microsoft wouldn't disclose the price of the Professional Plus and Enterprise editions, which are available only through volume license agreements for companies. Currently, Microsoft charges customers that buy software under its "enterprise" licensing agreement premiums of 22% to 30% for each step up they make in the Office line, says Julie Giera, an analyst at Forrester Research. Those differences could hold, though "Microsoft has given us only some general guidelines" on pricing for Office 2007, she adds.
According to Giera, as many as 60% of Microsoft's business customers could upgrade to the Professional Plus edition of Office within six years as requirements for document management and other collaborative tools permeate the workplace. "This is your classic information worker [scenario]," she says. "As these customers come to refresh their licenses, there are a lot of things that are in Office that make life easier." About one fifth of customers are likely to license Microsoft's Standard edition of Office, which carries an upgrade price of $239. Its core package of Word, Excel, and PowerPoint appeals to schools, charities, and other non-profit organizations, she says. The new Enterprise edition will likely be used primarily by "intellectual property heavy" companies in industries such as pharmaceuticals, oil and gas exploration, and defense contracting. "That's a small subset of customers," says Giera. Companies in those sectors will likely pay a premium for collaborative tools to manage worldwide research labs and large groups of product developers working remotely.
To take advantage of many of the server-side capabilities in Office, customers also need to buy from Microsoft client access licenses, or CALs for each desktop, which can range from $75 to $100 per year. When it ships Office 2007, Microsoft plans to introduce a new bundle of CALs that would discount access to a group of server products.