NetDocs Succumbs to XP

In a defensive move designed to protect its lucrative Office software suite, Microsoft Corp. has moved the rival NetDocs team under the Office umbrella. The shift terminates the very real threat NetDocs posed to Office and ends the rivalry and intense competition between the two teams, which have been headed by Office Senior Vice President Steven Sinofsky and NetDocs chief Brian MacDonald, senior vice president of Subscription Services.

MacDonald has taken a leave of absence for family reasons, officials said, and the 400-member NetDocs team will now fall under Sinofsky.

NetDocs is the code name for the integrated application that Microsoft demonstrated at its .Net unveiling last June. It includes a full suite of functions, including e-mail, personal information management, document authoring tools, digital-media management and instant messaging.

Microsoft watchers say it was inevitable that Office, as one of the companys crown jewels, would win the battle, even though NetDocs was designed to showcase .Net technologies. One of those technologies was a new user interface that delivered an integrated workspace that enabled all the application modules to be available simultaneously.

Office Product Manager Lisa Gurry downplayed the situation, saying the intention from the start has been to take the NetDocs technologies and incorporate them in other products, including Office versions beyond Windows XP.

Gurry also poured cold water on the possibility that NetDocs could survive as a stand-alone product, even as a .Net offering available as a hosted service over the Internet, saying NetDocs and Office would merge.

The entire NetDocs team was "floored" by the decision, a source close to the company said. "They have the whole product fully built and already had contracts in place for things like co-branding. The Microsoft powers-that-be have once again come down on the side of proprietary platforms instead of on standards-based ones," the source said.

To further protect the Office numbers, the implementation of the Office XP subscription service may be delayed beyond May 31—the date the packaged version hits retail stores. Pricing for the subscription offering has also been held back. Analysts said this could be designed to drive the number of full-paying upgrade users and new licensed users.

Microsoft is scheduled to release its financial results for next quarter this week. Analysts expect the Redmond, Wash., company to squeak past the low end of its earnings estimates.