Microsoft to Pour $3 Billion Into Office

Software giant hopes to double its annual revenue from Office to $20 billion by 2010.

MOUNTAIN VIEW, Calif.—Microsoft Corp. plans to spend more than $3 billion over the next three years on its Office productivity suite and hopes to double annual revenue from Office to $20 billion by 2010.

"I have a $20 billion dream for Office, but the product will be so much more than what we think of today. There will be new categories of application value from a client standpoint, as well as around servers and XML services.

"We can create enough value for this business to grow 10 percent a year over the next 10 years, giving us some $10 billion annually in revenue growth, alone, at the end of that time," said Jeff Raikes, Microsofts group vice president of productivity and business services, in a presentation at Microsofts campus here on Monday afternoon.

Small-to-medium sized businesses are currently underserved with business applications, relatively compared to the large business market, he said. "This decade will see people demanding that they are able to interact electronically with all businesses, so my goal with the Great Plains and Navision acquisitions is to offer far more than just great accounting software.

"I want to offer great value for SMBs when they move onto the Internet and help them work better with their partners, and I see that market and that demand boosting our business around that to $10 billion a year," Raikes said.

Raikes also expects to see another wave of value around information work in the next decade that will significantly outpace the enormous growth of the past two decades.

"We have seen major waves of value in information work over past two decades, from the creation of spreadsheets and word processors in the early 1980s to the integration of digital tools for creating content in the 1990s based around a graphical user interface," he said.

But there are many challenges today, involving connecting people, software and services. There are many disconnected islands of data, problems with becoming connected to business processes and inefficient collaboration, said Raikes.

Over the next decade, Microsoft will use three pillars to drive its information productivity business forward: It will serve a broader customer audience, create new customer value through innovation and help customers realize business value, Raikes said.