Microsoft's week centered around two major releases: the consumer rollout of Office 2010, the latest in its long-running line of productivity software, and Kinect, the hands-free gaming controller that the company hopes will appeal to Xbox owners and casual gamers. Microsoft's Office franchise will likely continue to hold a sizable share of the productivity software market, but faces potential longer-term competition from the cloud. Microsoft's Entertainment and Devices division, which produces the Xbox, recently underwent a major shakeup as it prepares for a new wave of product releases.
From a bottom-line perspective, Microsoft's most important
announcement this week was its worldwide release of Office 2010, Microsoft
Visio 2010 and Microsoft Project 2010. Although the productivity software has
been available to businesses since May-and the beta of Office 2010 long before
that-this marks the first time that consumers will have access to the product.
Microsoft is doubtlessly hoping for a Windows 7-sized hit.
But Office 2010 could potentially be a victim of its previous versions'
success; unlike Windows 7, which was seen by many users as a cure-all for the
aged-but-stable Windows XP and the generally maligned Windows Vista, Office has
a longstanding reputation as a stable and ubiquitous software platform: you can
almost see the potential customer leaning back in their chair, wondering, "Do
we really need to upgrade, when the current version of Office works just fine?"
Microsoft, obviously, would like the answer to that question
to be "Yes." During a May 12 unveiling of the software in New York City,
executives touted Office 2010's features supposedly designed to take advantage
of an increasingly mobile and home-based workplace. In a bid to further sweeten
its appeal-or at least increase its marketplace presence-Office 2010 is also
being offered pre-installed on new PCs, either in a free stripped-down version
or as a full program unlockable with a special card.
"For the first time, people can purchase a Product Key Card
at retail to activate Office 2010 preloaded on new PCs," Stephen Elop,
president of Microsoft Business Division, wrote in a June 15 statement. "For
those who want to download Office 2010 direct from Office.com for an existing
PC, the new Click-to-Run technology will have them up and running in a matter
Microsoft claimed in a June 15 press release that, based on
its own survey, some 75 percent of Office 2010 beta users plan to purchase the
retail version of the software within six months. "We predict this will be the
biggest consumer release of Office, ever," Elop wrote in the accompanying
statement, however predictably.
Microsoft will likely hold onto its lion's share of the productivity-software
market in the short-term
, the company also recognizes the potential
game-changer presented by cloud-based software such as Google Docs. In an
effort to counter-program that trend, Microsoft is offering office Web
Apps-stripped-down editions of OneNote, Excel, Word and PowerPoint-free and
accessible to Windows Live subscribers via their browser. However, because
Microsoft needs Office to remain a profitable franchise, a number of features
are restricted to the purchasable, desktop-based version.
But at least one analyst thinks that desktop-based
productivity software faces no threat from the cloud-at least, not quite yet.
"On the shoulders of Office 2010 rests nothing less than the
defense of packaged software in general," JP Gownder, a Forrester analyst,
wrote in a June 14 posting on his eponymous blog. That being said, he added,
"the Office versus Google Docs debate doesn't merit a lot of consideration-it's
still no competition."
cited the combination of consumers' "deep, longstanding relationship with
the power and convenience of PCs for running desktop-based
programs, and the "more limited experience" offered by browser-based
applications as reasons behind Office 2010's probably success.
"Invariably, some reviews will compare Google Docs and
Office Web Apps ... as if they were meant to be comparable offerings," Gownder
added. "This is a mistake. Office Web Apps are a complement to the client
program, more of a feature than a stand-alone competitor to Google Docs."
In addition to the productivity-centric Office 2010,
Microsoft's other major announcement this week centered on Kinect, its
"controller-free gaming device" that allows Xbox players to control their
digital avatar by body motion. Unveiled at the Electronic Entertainment Expo in
Los Angeles, where the company was rolling out its new Xbox-related products,
Kinect is Microsoft's answer to Nintendo's Wii, which sold millions of units
based on its unconventional motion-based controller and roster of casual,
easygoing games. Kinect uses a three-dimensional video camera to track 48
points of movement on the user's body.
Gaming has evolved into an important element within
Microsoft's financial house. The company's Entertainment and Devices division
contributed around 11 percent of its $14.5 billion revenue in the first quarter
of 2010, up slightly year-over-year. Contrast that to Microsoft Business
Division, which dipped slightly.
But while the Division overall has posted healthy numbers,
its individual product lines have achieved decidedly more mixed results.
Although the Xbox franchise has begun to generate revenue, after years of
losses, products such as the Zune portable media player have not attracted the
same level of consumer attention. That perhaps underlies the Divisions recent
shakeup, in May, which saw the departures of not only unit president Robbie
Bach but also J Allard, its senior president of Design and Development.
With that shakeup,
Microsoft seems to be clearing the decks for its next wave of releases through
, which include not only Kinect but also Windows Phone 7. Microsoft
pushed the latter at its recent TechEd conference in New Orleans as the next
big smartphone platform for developers, but it will also face substantial
competition upon its late-2010 release from Apple's iPhone 4 and the Google
Android line of devices. Microsoft also recently launched a pair of Kin phones,
aimed at a social-networking-friendly demographic, but has not yet reported
sales numbers for that project.
Windows Phone 7, along with Office 2010, will help determine
Microsoft's longer-term fortunes in both the consumer and business spaces;
their success or failure, particularly with Phone 7, will likely serve as
barometers for how well the company can deal with the tech industry's rapid