To most of the computer-using world, Microsoft Office is the familiar workhorse of the desktop, a collection of software for creating documents, spreadsheets and presentations.
But for Microsoft, which is starting to see its growth slow as it ages, reinventing that suite of old reliables -- including Word, Excel and PowerPoint -- has become nothing less than a key to its future.
PHOTO: AP
"Office defines business productivity," Bill Gates, Microsoft's chairman, told financial analysts in July. He added that "the productivity area is probably the most important franchise that we have."
With that focus, Microsoft is now pursuing a strategy to transform Office from a bundle of programs on personal computers into a family of software that can put Microsoft's technology deeper into the operations of corporate data centers. As Steven A. Ballmer, Microsoft's chief executive, wrote in an e-mail message to employees last month, "Our biggest growth opportunity is with our existing base of Office users."
Microsoft is banking on the Office initiative to help it fend off the challenge from open-source software and other competitors. But if the plan stumbles, Microsoft's hopes for sustained growth and greater profits could come under heavy pressure.
The logic of building on the Office franchise is not hard to see, given that it has more than 90 percent of the market for office software applications.
The information worker business at Microsoft, which is nearly all from Office, had revenues of US$10.8 billion in the year ended in June, and operating profit of more than US$7.15 billion. As a stand-alone business, Office -- which on average sells for about US$275 -- would be slightly larger than the second-largest software company, Oracle, and far more profitable. Only the Windows operating system, the other pillar of Microsoft, is slightly larger.
Traditional Office programs helped enhance productivity by allowing workers to easily create and modify digital documents. The aim of the new initiative is to increase productivity with new tools for collaboration, communications, planning and document handling.
New programs -- like SharePoint, LiveMeeting, OneNote and InfoPath -- have been introduced in the last year or so as part of the "Office system," a term Microsoft adopted last fall to replace "Office suite."
The new design makes programs like Word, Excel and Outlook e-mail part of collaborative work spaces. In theory, an employee working in Word could tap into all the corporate information on a customer or project.
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