Office 2010 Sales Lagging, Says NPD Group

Selling Office 2010 to consumers and businesses may be an uphill battle, according to the NPD Group, which said the new productivity suite is lagging behind sales of Office 2007, its predecessor, during the two-week period following launch.

"According to NPD's Weekly Tracking Service the results are mixed," Stephen Baker, an analyst for the NPD Group, wrote July 13 on the company's blog. "Units and dollars are down from Office 2007's initial two weeks of sales but are in line, and in fact slightly ahead of, sales trends of Office 2007 so far this year."

Microsoft has been a victim of its own success, Baker goes on to suggest: "Selling such a heavily used product into a base that has already been upgrading at a very high rate is an enormous challenge." Compounding the issue has been Microsoft's relatively low-key rollout of the software, without the high-profile bells and whistles that have accompanied other large releases such as Windows 7.

The NPD Group estimated that one-third of Office 2010's sales have come via key cards, purchased at retail, which unlock versions of the software preloaded on PCs. "This is important," Baker wrote, "because we do believe that the success of [Office] 2007 and 2003 at retail will make it very difficult for the boxed version of 2010 to generate much incremental retail sales volume" above the trend for the past several months.

Unlike Windows 7, which many users regarded as a cure-all for the aged but stable Windows XP and the maligned Windows Vista, Office has a longstanding reputation as a ubiquitous and relatively trouble-free platform. During the software's May 12 unveiling for business customers at an event in New York, executives tried to make the case for upgrading by highlighting Office 2010 features that they said are designed for an increasingly mobile and home-based work environment.

In a June 15 news release, Microsoft claimed that, based on its own internal survey, about 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," Stephen Elop, president of Microsoft Business Division said at the time.

As a part of the Office 2010 push, Microsoft released Office Web Apps, which allow users to view and perform lightweight edits to documents online. Many pundits saw the cloud-based offering, which is free for Windows Live subscribers, as Microsoft's attempt to blunt the potential impact of Google Docs, which has a middling share of the overall productivity-software market, but could grow in popularity with the increased prevalence of the cloud in peoples' lives.

However, Baker added, the softer sales numbers for Office 2010 are not because of Google Docs or similar cloud-based offerings.

"While products like Google Docs are certainly playing a part in the overall productivity software ecosystem," Baker wrote, "these products have little awareness among the mainstream consumer who is the retail boxed version's primary consumer."

Mainstream consumers, he said, "have not embraced the concept of the cloud, nor are they likely in the short- to midterm, making most of the questions around free software moot."