Sun Takes Aim at Office With Low-Priced Staroffice

Many companies have tried to challenge Microsoft Corp. in the office productivity software space, and many have failed.

But if Sun Microsystems Inc. has its way, this time will be different. As its branded version of StarOffice 6.0 is released this week, Sun will try a two-pronged approach to selling the software: highlighting its features and cost, while exploiting the frustration Microsoft Office customers have expressed over the companys pricing and licensing terms.

"The pricing and licensing problems we have had with Microsoft around Office are the primary reason why I want to move the entire company onto StarOffice," said Eric LeSatz, vice president of IS administration for New York brokerage A.B. Watley Inc.

Microsoft customers have taken issue with the companys announcement last year of its licensing and Software Assurance plan, which requires companies to buy software upgrades for an annual fee. The deadline for signing up is July 31.

Recent surveys by Gartner Inc. and Giga Information Group Inc. show that one-third of businesses contacted do not intend to sign up for Microsofts new plans; another third is undecided.

Thats where Sun plans to step in. According to Mike Rogers, vice president and general manager of desktop and office productivity at the Santa Clara, Calif., company, consumers and enterprises could save at least 75 percent in licensing costs if they move from Microsoft Office to StarOffice. Rogers added that about 1.8 million users at Fortune 500 companies are currently evaluating StarOffice 6.0, which runs on the Windows, Linux and Solaris platforms.

StarOffice 6.0 will be available for $75.95 through retail channels this week. Enterprise customers that commit to 150 or more users will pay between $25 and $50, while education customers will pay CD-ROM and shipping costs only, Rogers said.

In contrast, the standard nonupgrade version of Microsoft Office is $479, and the upgrade version retails at $239. Office for students and teachers costs $149, and the volume licensing programs offer additional discounts.

Such a price differential may very well sway users. Gartner analyst Michael Silver, in Stamford, Conn., said unless Microsoft makes significant concessions in its new Office licensing policies, StarOffice will gain at least 10 percent market share at the expense of Microsoft Office by the end of 2004.

Microsoft officials are not worried, said spokesman Dan Leach, in Redmond, Wash. Leach said they believe that if the software delivers value, customers will remain interested in buying it. "We did a lousy job of communicating the [Software Assurance] program," he said. "Theres still a tremendous amount of confusion out there about the program."

But making a dent in Offices base wont be easy. Gartner puts the cost of switching from Office to StarOffice at $1,200 per system. There are also issues of document compatibility to consider.

Microsofts Nicole von Kaenel, product manager for Office XP, said there are indications that StarOffice 6.0 document compatibility is unsatisfactory. Documents that contain heavy formatting, macros, templates and pivot tables will present problems to customers. "And that flies in the face of office productivity," she said.

Suns Rogers disputed this and said that among the most significant new features in the product is the open XML-based default file format. Users will have far more robust Microsoft Office import and export filters, including support for Office XP, he said.