Microsoft's Week Involved Office 2010, Kin Phones, i4i Lawsuit

Microsoft had a week full of events, including the launch of Office 2010 and SharePoint 2010 for business customers, the release of its social-networking-focused Kin phones, and another legal twist in its long-running courtroom battle against i4i over Microsoft Word. Microsoft clearly hopes that strong sales of Office 2010 will convince the public of the continued viability of desktop productivity software, despite the increased prevalence of cloud-based applications such as Google Apps. The Kin phones, on the other hand, mark the first release in Microsoft's new mobile strategy.

Microsoft's week centered on arguably its biggest software launch since Windows 7: the final versions of Office 2010 and SharePoint 2010, released to business customers on May 12. In keeping with Microsoft's long-running attempts to make every major software release into a national event, the company gathered journalists, analysts and customers on the New York set of "Saturday Night Live" for a talk by Stephen Elop, president of Microsoft's Business Division.

"Organizations are adjusting to the new economic realities," Elop told the audience. "Our customers are responding to a changing face of the workforce: the Millennial Generation, people who communicate in different ways." Another goal of Office 2010, he added, was to meet its users' expectations about an increasingly mobile and cloud-based workplace.

Click here to see more about Office 2010 and SharePoint 2010.

"Our employees expect the same technologies at home as in the workplace," Elop said. "They want all of those technologies to work very well and seamlessly together."

Microsoft faces two challenges with regard to Office 2010. The first is persuading its customers, particularly businesses with restricted IT budgets following the recession, that the newest version of its productivity software warrants an upgrade. Unlike Windows 7, seen by many as the antidote to the much-maligned Vista and a necessary upgrade from the stable-but-aging Windows XP, Office 2010 succeeds a relatively recent and well-regarded version-perhaps leaving customers to ask, "Why upgrade?"

Seeking to counter that objection, Elop spent a portion of his presentation focusing on Office 2010's supposed ability to "reduce costs" and ignite "significant gains in productivity."

The other challenge comes from cloud-based productivity software such as Google Apps. Although Google only held 0.09 percent of the productivity software market by revenue in 2009, according to Gartner, the popular perception is that the growing popularity of cloud computing will soon translate into substantial gains for Google Apps and its ilk. As a countermove, Microsoft is offering free, stripped-down editions of OneNote, Excel, Word and PowerPoint to Windows Live subscribers via the browser.

Since Microsoft still needs Office to generate revenue, however, many of the top-shelf features of those applications are restricted to the full, desktop-centered version.

Google, recognizing the increased allure of cloud-based productivity, decided that the launch of Office 2010 meant it was time for a little counter-programming of its own.

"If you're considering upgrading Office with Office, we'd encourage you to consider an alternative: upgrading Office with Google Docs," Matthew Glotzbach, Google enterprise product management director, wrote in a May 11 posting on the Official Google Enterprise Blog. "If you choose this path, upgrade means what it's supposed to mean: effortless, affordable and delivering on a remarkable increase in employee productivity."

Google Docs offers a way to "end the endless cycle of upgrades," Glotzbach added, noting that the supposed cost of upgrading to Google's offering would only be "a server or two."

In the long term, Google Docs and cloud-based productivity applications could represent a more substantial threat to the Office franchise, according to some analysts.

"I think we are likely to see a surprising number of folks look at Docs as the quick and easy way to get to features quickly during the Office 2010 upgrade cycle," Rob Enderle of the Enderle Group wrote in an e-mail to eWEEK on May 11, "because it will be vastly easier than getting budget approval and vastly faster than waiting for the rollout of Office 2010."

Microsoft's other big release of the week, the Kin phones, made their debut through Verizon on May 13. The Kin One and Kin Two, intended to appeal to a younger, social-networking-centric demographic, feature hardware and software designed to deliver a constant stream of updates and other social data.

The Kin One will retail for $49.99 and the Kin Two for $99.99, after a $100 mail-in rebate with a two-year service plan. Talk plans start at $39.99 per month, while e-mail and Web for Smartphone plans start at $29.99 for unlimited monthly access. That price may prove a bit steep for teenagers, especially considering that the devices lack smartphone features such as app downloading; however, Microsoft is reportedly saying the Kin platform could eventually merge with its upcoming Windows Phone 7, which would expand the Kin's functionality.

Before that potential hurdle can be overcome, though, the Kin has to deal with mixed reviews from a number of blogs and tech sites, which generally praise the phones' ability to upload content to the cloud but also express reservations about the user interface, slowness to receive new social networking updates and a few hardware issues.

Ultimately, as with Office 2010, the marketplace prospects of the Kin will be dependent on a broad range of factors.

"Success will depend on how well Studio and Windows Live support integrate with the phone, and since only Microsoft can deploy a new service to the device, how well it does so is critical," Jack Gold, principal analyst of J. Gold Associates, wrote in an April 13 research note. "Success will also depend on what types of service plans are available, how they're priced and how good the service is (i.e., the AT&T/iPhone fiasco would be a killer for Kin). Finally, what specialized services will the carriers offer to try and garner some of the potential cloud revenue?"

Verizon is the exclusive carrier of the Kin in the United States, while Vodafone will perform those duties in Germany, Italy, Spain and the United Kingdom later in 2010.

Sandwiched between those major releases came news of no less import to Microsoft's fortunes: the company faced another setback in the long-running intellectual property case leveled against it by Toronto-based i4i, as the U.S. Patent and Trademark Office confirmed the validity of a patent allegedly infringed by the software giant.

"This is a very material step in our litigation against Microsoft," Loudon Owen, chairman of i4i, wrote in a May 11 statement. "Put simply: i4i's patent is unequivocally valid. Even though Microsoft attacked i4i's patent claims with its full arsenal, the Patent Office agreed with i4i and confirmed the validity of our '449 patent.'"

U.S. Patent 5,787,499 "infuses life into the use of Extensible Mark Up Language (XML) and dramatically enhances the ability to structure what was previously unstructured data," Owen continued. "As the magnitude of data grows exponentially, this is a critical technological bridge to controlling and managing this sprawling octopus of data and converting it into useful information." More germane to i4i, though, is that Microsoft Word 2003 and 2007 allegedly feature coding that violates the patent's properties with regard to custom XML.

"We are disappointed," Kevin Kutz, Microsoft's director of public affairs, said in a May 11 statement, "but there still remain important matters of patent law at stake, and we are considering our options [for getting] them addressed, including a petition to the Supreme Court."