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Microsoft is calling on its partners to overcome customer inertia in the Office franchise, and help drive sales of its desktop and server productivity system.

Microsoft opened its Worldwide partner conference with tantalizing tales of $140bn in unrealized market opportunities for companies building applications and services using Office 2003 in messaging and collaboration, portal and enterprise content management, enterprise project management and smart client.

Highlighting portal and smart client, Microsoft claimed companies can realize profit margins of between 20 per cent and 40 per cent building plug-ins and services for Office 2003, with start-ups breaking even in their first nine months.

Large-scale opportunities are available primarily as a result of the fact large numbers of customers are not upgrading to later editions of Office, like Office 2003. While Microsoft claims 600 million Office users analysts estimate 30% are still running Office 1997, having skipped Office 2000 and Office XP.

The prime reason is Office 97 is "good enough" for these users' needs.

That's a worrying fact for Microsoft which is now working on the successor to Office 2003, codenamed Office 12, which is due in the second half of 2006. Office12, demonstrated at Microsoft's partner conference, will be the first version of Office to feature peer-to-peer technology from Groove Networks, acquired this year.

Other areas of focus for Office 12, revealed a Microsoft's conference, are browser-based forms and InfoPath development and integration with Outlook, improved search and information management tools, and content management tools.

"A lot of people don't understand how Microsoft Office has changed in last four to five years," Chris Capossela corporate vice president for the information worker product management group told delegates on Friday morning. "We've gone beyond traditional applications of Windows and Excel on desktop and expanded beyond improving personal productivity."

"The number one competition in the Office business is this perception that old versions of Office or cloned versions of Office are good enough and you don't need the latest software for end users or information workers. We are on a mission to show people the work place has changed," Capossela said.

To shepherd ISVs toward the legacy Office market Microsoft is increasing its level of investment. Microsoft is investing $300m in Office marketing for fiscal 2006 and expanding the number of field sales people from 450 to more than 1,000. Capossela said Microsoft wants to quadruple the size of its partner network from 240,000 companies to move users off of legacy versions of Office. ®

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