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Microsoft is facing an uphill battle to push copies of Office 2003 on customers and its ISV partner ecosystem, ahead of next year's predicted launch of Office 12.

Office 2003 appears to be falling behind in targeted sales for this point in the product's lifecycle, according to Microsoft's own internal figures and guidelines. Just 15% of PCs are running Office 2003, two years into its life, with Office 12 - the next edition of Microsoft's ubiquitous suite - now on the horizon. However, Microsoft traditionally expects between 50% and two thirds of customers to be running the previous version of Office when the new copy ships.

During a recent press roundtable Chris Capossela, vice president for Microsoft's Information Worker product management group said that Microsoft is holding firm on these numbers, and expects two thirds of the 400m Office installation base will be running Office 2003 at the time when Office 12 ships.

That means an awful lot of sales, marketing and product development work by partners during the next 18 months, in order for Microsoft to hit those figures.

News of the gap between sales and expectations explains Microsoft's recent attempt to tempt partners developing services and add-ins for Office 2003, and the earlier Office XP, with tall tales of a $140bn market opportunity in getting customers to move off of old versions of Office onto newer editions.

Microsoft believes customers should adopt Office 2003 now, rather than hold out for the anticipated release of Office 12, in-order to capitalize on recent advances in the suite's e-mail management, remote networking and security.

Capossela said: "It's a matter of how much value do these [features] have in 0ffice 2003 and are customers willing to wait for 18 months to do team collaboration or 18 months before they can get their inbox under control. Eighteen months is along time for people to wait."

According to analysts, and a sizeable chunk of letters to The Register on this subject, one hurdle Microsoft must clear is persuading customers to overcome the basic level of comfort and familiarity they have using their existing, older, copies of Office. Capossela believes Microsoft can overcome this inertia by evangelizing people on how the workplace has changed and later versions of Office can meet their needs.

"For us, it's telling people about the things they can do that add [to] the changing workplace. It's about what are the pains of the changing workplace... the fact e-mail has quadrupled. The Outlook we shipped then wasn't great as handling tons of e-mail or you don't have to VPN into the core network from an internet café," Capossela said.

Reality bites

Directions on Microsoft lead analyst Paul DeGroot is skeptical Microsoft can win converts by appealing on features. "There are hundreds of millions of people who have been using this product for three to five years and if they haven't discovered the stuff they need to do what they need by now, then you can't hit them in the face with it," DeGroot said.

With this in mind, DeGroot notes, organizations won't pay hundreds of dollars for Office 2003 on thousands of desktops, without any clear benefit.

Also questionable is just how far the improvements in search and integration between recent versions of Office and server products like SharePoint Portal Server - which are expected to be extended in Office 12 - are really worth paying for. It is in this field that Microsoft faces a growing challenge from search specialists like Google.

Google desktop search can be downloaded for free and scans Word, Excel, Outlook, Internet Explorer, Firefox, PDFs and AOL among other file types. For those with bigger search aspirations, there's the Google Appliance, starting at $2,995.

The big plus of desktop search is, of course, it searches - surprise - just the desktop, rather than trying to index every file on a server, and thereby gobbling up companies' valuable network bandwidth and precious server resources.

Winning customers over to Office 2003 is just half the struggle, though. Microsoft must also do more to persuade ISVs Office 2003 is worth their investment in time and resources.

Part of this demands a clear tools roadmap from Microsoft: currently partners have a range of environments and languages to build Office plug-ins and services, including Visual Studio Tools for Microsoft Office System and Visual Basic for Applications (VBA). While VBA is well established, its future is uncertain as the language is not a .NET product and uses the older COM architecture. What happens if, as an ISV, you back the wrong language?

Secondly, according to DeGroot, there is a fundamental conflict at the heart of Microsoft's client strategy that has yet to be resolved. That dilemma comes down to, should ISVs use the thin client approach and build plug-ins and services using Microsoft's ASP.NET and IE or should they go fat client with VBA?

"It's a huge product to deploy... you get stuff that not everybody uses the whole time," DeGroot says of the fat-client approach to Office.

Microsoft has 18 months to sell Office like it's never sold before. Looks like the company will need to offer customers some strong pricing and product incentives to move while re-assuring partners over the architectural choices they take. ®

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