Commentary: Silver Lining in the Cloud

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Microsoft recently launched the suite of Office 2010 and SharePoint 2010 tools and services to business customers, and, at the same time, announced its Office Web Apps strategy. Office applications are a huge part of Microsoft’s revenue, and the software giant currently owns about eighty-five percent of the business productivity solutions market. That’s a huge chunk of that market, but it’s down from the market share it enjoyed in the middle of the previous decade.

Cheap alternatives to the Microsoft Office status quo have had a small but increasingly significant impact on Microsoft’s strategy. Alternatives like OpenOffice.org, Corel’s WordPerfect suite and IBM’s Lotus Smart Suite are client-based (installed on the worker’s computer) packages that offer similar capabilities and file compatibility with the Microsoft Office tools at a lower price point.

Advances in cloud-based computing have also influenced Microsoft’s strategy. Cloud computing offers the promise of reduced administration costs, ubiquitous access, and outsourced responsibility for security and disaster recovery. It is only natural that the most commonly used productivity applications should have a place in the cloud – after all, transactional applications have lived in the cloud for quite a while. The roadblock to having productivity apps delivered over the Web has been a gap in technology. Productivity applications are highly interactive, not transactional, and require a richer experience in the user interface than basic Web technologies could provide. Advances in Web application technology, including Ajax, Silverlight and Flash have made that level of interactivity possible.

It’s no surprise that Google has taken a direct aim at Microsoft’s dominance in the productivity space with its cloud-based Google Apps offering. For $50 per year per user, organizations can move their workforce to a Web-based office suite of e-mail, calendaring, word processing, spreadsheet, presentation graphics and intranet content management (a free, ad-supported version is also available). While the capabilities of Word, Excel and PowerPoint eclipse those of their Google Apps analogs, most users don’t use or need advanced features, and Google Apps easily fills the need.

Microsoft announced that it will be offering Web-based versions of Word, Excel, PowerPoint and OneNote to provide cloud-based (as well as enterprise-based) productivity tools on a web platform. While it is unlikely that masses of corporate users will flock to Google Apps overnight, Microsoft’s announcement makes it clear that Microsoft will not sit idly watching its market share slowly erode. Instead, it is positioning its Office suite to dominate both the desktop and the cloud.

Evolving to the Cloud

Microsoft’s shift from the desktop to cloud-based computing is not revolutionary – it’s evolutionary. It is part of a repeating pattern of network technology maturation. Technologies are initially proprietary, geographically isolated and specific to a particular business interest. As those technologies mature from proprietary to commoditized services, organizations outsource those commodity services as a cost savings measure. Those outsources services are federated with internal information services. Eventually larger portions of services are commoditized and are consolidated as outsourced services as the next new wave of proprietary innovation takes a foothold.

Microsoft’s shift to the clouds is also a shrewd business strategy. Cloud-based computing is changing the way we buy and consume software (see “Shift happens: Cloud computing (and why you should care)” Wisconsin Law Journal, November 4, 2009). The days of buying a box containing DVDs to install on a computer are not gone yet, but they are numbered.

Office Web Apps

The Office Web Apps are positioned as complementary to the stand-alone Word, Excel, PowerPoint and OneNote applications. They are lightweight versions of the desktop-based solutions that are accessed through a browser. The Web Apps are lean and targeted at the essential tasks of document creation and editing.

The Office Web Apps will be made available for Microsoft’s volume license customers to install along with Microsoft SharePoint services on their own servers. This will allow these businesses to determine their capacity needs, configure the appropriate number of servers and tailor the load balancing between those servers to optimize performance.

The Office Web Apps will also be available for on a subscription basis through Microsoft’s Online Services, and to individuals for non-commercial use on a no-cost, advertising-supported basis.

The technical preview of Office Web Apps offers a look at Microsoft’s answer to Google’s challenge for the hearts and minds of users. The Office Web Apps feature a user interface design that is consistent with the desktop equivalents. That makes for a very short learning curve if you’ve used the desktop apps. The user experience is surprisingly snappy. These are works in progress, to be sure. There is plenty of core functionality that has yet to be incorporated. While it is too early for a shootout between Office Web Apps and Google Apps, Microsoft is definitely going to give Google a run for their money.

Whether you love or hate Microsoft, the Office Web Apps offering is good news for organizations whose business revolves around documents. The competition fosters better features and better value from all vendors, no matter who you favor to win.

Ron Phillips is a self-described attorney-computer nerd with more than 15 years of experience as a software architect and technology entrepreneur. He has helped to design and build enterprise systems for large and mid-size corporations, developed commercial software products and authored several books and articles concerning software development, applications and technology. He enjoys helping fellow attorneys with their technology questions one-on-one and on the Practice 411 forum, and looks forward to sharing his technology perspectives in this column. You can reach Ron at [email protected].