(Free) Web-Based Microsoft Office in 2010: Too Little, Too Late?

Stephen Elop, formerly of Macromedia and currently head of Office software at Microsoft, has announced a bold plan: to make Microsoft's Office freely available on the web, much like Google Docs.


Hell just froze over.


Or has it?


Truth is that Elop's plan is not as bold as it sounds initially. And with good reason: Microsoft seems reticent to let go of its largest source of revenue. According to an article published at Bloomberg, "Office 2010, due by June, will include a free Web-based version for the first time, matching similar software from Google. Future updates may add Twitter-like functions that allow users to post short messages."


So, Microsoft has finally heard the message. This is reason to be optimistic (even though I am a huge fan of Google Docs, I have to admit I would jump on a web-based, free version of MS Word or Excel if given the chance). But then, the company adopts the position that they want to go in that direction, but carefully, so as not to damage the established business model. An internal analyst at Microsoft said “You don’t want to give everybody free Office over the Web because that jeopardizes a highly profitable business, but you have to do something.” That is correct. But they don't seem to realize that 'doing something' involves embracing a new model that will by nature disrupt what they're doing right now.


Here are the facts: Microsoft reported the impressive sum of $58.4 billion in sales last fiscal year. The Office unit accounted for around $18 billion - virtually a third of the total. If that unit's numbers were to dip by any measure, the whole company's revenues would take a hit - something that shareholders might not be overly happy about.


But the situation Microsoft faces here is one where risk-taking should be given some serious thought. Companies like Google, Salesfroce.com, 37Signals, and others, have by now much more experience and penetration in the business of web-based applications delivered over the Cloud. Some organizations are boldly moving towards making use of this. And with good reason - Google's enterprise suite, Google Apps (which includes Docs and other productivity tools) has a license cost of $50 per user per year. Substantially less than Microsoft's $150, even more so if one considers that all one needs to use Google's offering is a computer with a browser and an Internet connection. Microsoft might require more robust computers, and perhaps more infrastructure beyond that.


Sure, Office is a much more powerful tool than Google Docs - today. Three years down the road? Five years? It doesn't even have to be Google. IBM and Sun either possess or have in the past made attempts at delivering the same service. Then, the infrastructure and the market might not have been ready. Today they are. More and more are companies looking for ways to save money. And SaaS and IaaS solutions are making this possible.


Microsoft says they want to embrace the cloud. So far, they seem to be suspiciously looking at it while holding an umbrella. If they don't change their strategy, they might find that while they were worrying about the Cloud, they failed to build their Ark.