A Lesson in Office Student and Teacher Edition
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When is less more? When retail buyers of all kinds, even businesses, opt for Microsoft's consumer version of Office. |
According to NPD, productivity suites are one of the strongest software sales categories at retail. Overall, retail software sales were flat through the end of November. By contrast, sales of productivity suites rose 12.8 percent year over year. One product--Microsoft Office Student and Teacher Edition--made up 80 percent of the category's sales.
The product's success--and nearly singular office productivity category dominance--means that many more buyers than those qualified to purchase the software do so. There is no check to ensure that buyers really are teachers, students or in households with either.
"They don't card at the door," said Chris Swenson, NPD's director of software analysis.
Microsoft's no-buyer-check policy, coupled with aggressive pricing and rebates, makes Student and Teacher Edition the defacto retail productivity suite standard. During the 2006 back-to-school season, rebates put the software's price around $100, or about $250 to $300 less than Office Standard.
"By pricing STE so low, it doesn't make [it] easy for retailers to carry other versions," Swenson said. With shelf space so limited and Student and Teacher Edition selling so well, the software increasingly is the only choice on store shelves, he said.
Microsoft first offered Student and Teacher Edition in late 2001, at a promotional price. Like those electronics stores with perpetual "Going Out of Business" signs, the low $150 price continues more than six years later.
The larger questions: Does Student and Teacher Edition's low price discourage sales of higher-priced versions, and does it essentially encourage software piracy?
Swenson said that it's hard for retail buyers to justify the price of Office Standard when Student and Teacher Edition costs so much less. "STE comes with three activations," he said. That works out to about "$50 a computer." Pricing like that would be hard for smaller businesses to resist, for example. For those same three computers, Office Standard would cost about $900 more.
Back in 2002, when I first wrote about Student and Teacher Edition, analysts speculated that Microsoft was using the SKU to cut Office pricing for consumers without jeopardizing business pricing. More than four years later, Microsoft may be victim of its own success, which could be one explanation for Version 2007 SKU changes.
Later this month, Microsoft will replace Office Student and Teacher Edition 2003 with Office Home and Student 2007. The new version tweaks the name to emphasize that the software isn't meant for businesses and it changes the software within. Student and Teacher Edition and Office Standard come with Excel, Outlook, PowerPoint and Word. Home and Teacher swaps out Outlook for OneNote.
From a straight product-feature perspective, the change doesn't make a whole lot of sense, Swenson said. "I think the vast majority of consumers have no idea what OneNote is," he explained.
OneNote could greatly diminish the value for business users looking for copies of Office on the cheap. Businesses would more likely want Outlook. I'd argue the Outlook-for-OneNote swap is as much about discouraging piracy as offering something possibly more suited to consumers.
Comments (8)
One thing that purchasers should realize is that RETAIL Microsoft software IS NOT included in the Technology Guarantee program. What this means is that you DO NOT get a free upgrade to Office 2007 by purchasing Office 2003 via retail. Only OEM editions will come with the free upgrades.
"From a straight product-feature perspective, the change doesn't make a whole lot of sense, Swenson said. "I think the vast majority of consumers have no idea what OneNote is," he explained."
There's a reason for this - in Windows Vista, the necessity for Microsoft Office Outlook is no longer there - the contact management for home users is handled by Windows Contacts, and there is now Windows Calendar. Windows Mail also has an included spam and phishing filter, similar to the one included in Office Outlook 2003/2007. The extra fluff from Office Outlook isn't necessary for home users, and the vast majority don't require Exchange support.
OneNote is also included to drive sales for higher-education students where notetaking is a big plus. A teacher would also find this quite handy, creating markup for electronically-submitted documents from students. Also, it helps to drive sales of Tablet PC's to this market segment, where Microsoft originally had high hopes for, as did I. The Tablet PC is great platform, but the demand needs to be raised so as to improve competition and lower manufacturing costs. OneNote can also work with many drawing tablets for use with a desktop system. Businesses are starting to realize this and it's improving productivity for many of them.
"OneNote could greatly diminish the value for business users looking for copies of Office on the cheap. Businesses would more likely want Outlook. I'd argue the Outlook-for-OneNote swap is as much about discouraging piracy as offering something possibly more suited to consumers."
That's right! If it's the wrong version for the user, it's a breach of license. Businesses should know what that implies - they are using the software illegally. Illegally licensed software can cost them severe fines all for a few bucks on retail software. With the BSA/CAAST in play, investigating license breaches and piracy all the time, it's not worth it for a business to go down that road. They should always look at volume licensing or other available Microsoft purchasing programs whenever possible.
Posted by Waethorn | January 2, 2007 10:31 PM
Joe,
I look forward to hot having Outlook in the new version.
Having Outlook and Outlook express always confused my parents and other non-technical friends.
Just having Vista and Windows Mail will be much easier for them to understand along with the new home version of Office.
Posted by David Taylor | January 3, 2007 9:51 AM
One thing that purchasers should realize is that RETAIL Microsoft software IS NOT included in the Technology Guarantee program.
I don't know where you got that information, Waethorn, but that's wrong. Retail versions of Windows XP and MS Office are part of the "Technology Guarantee" program. From this page at Microsoft.com:
As a show of our appreciation to customers who acquire a qualifying Windows XP or Microsoft Office 2003 boxed product from a retailer or authorized Microsoft reseller during the qualifying eligibility period*, we are providing minimal cost** upgrades to Windows Vista and 2007 Microsoft Office software.
Posted by Wesley McGee | January 3, 2007 11:30 AM
I stand corrected. I just got word about this today, myself. Seems that Microsoft started this AFTER the OEM Technology Guarantee because many customers were upset that they had to purchase OEM copies that are typically only (although not required to be) sold with a new computer and complained because buying in retail costs more, but offers less advantages. In fact, after talking to a purchasing rep just last week from Microsoft, he had to get the information from a department manager and even he said that OEM was the only one in the Technology Guarantee. It was a question I had brought to them, though. Perhaps this is something that was only brought about recently though, because even on the OEM System Builder site, it had stated that only the OEM products offer it.
Posted by Waethorn | January 3, 2007 12:37 PM
Lack of Outlook in the home edition is a bad move - I for one hate the outlook express client and have used the outlook client for a few years now - much more functional and better to use. As I use Outlook at work it means i am using a common interface regardless of whether I am working or at home - I know many people take this approach
Posted by malc | January 4, 2007 6:47 AM
I'm a devoted Microsoft user and Microsoft-only Consultant, and I think this move stinks.
My Home, Student, and Teacher users/clients have been using Outlook for years now, based on Microsoft wisely making it available in earlier versions of the Student & Teacher Edition, and they're simply not able to change just because some dunder-head in Redmond made this ill-advised marketing decision.
Many years of their data (contacts, calendar info, past emails, etc) are already contained in their Outlook "PST" files, and God only knows what it would take to retrograde and convert it back down to whatever that rinky-dink "substitute" application is inside of Vista, not to mention their lack of technical skills making it virtually impossible, in any case.
Instead they will now shamefully have to scrape-up the extra funds to buy the stand-alone version of Outlook 2007 and hope it will somehow "integrate" with the new Home & Student 2007 suite.
This is money they don't readily have; if they did they would be purchasing the "Standard" version of Office to begin with.
BIG Microsoft goof-up, rip-off, and senseless money-grab on this one...
Posted by Travis | January 29, 2007 1:04 AM
"Waethorn" writes: "I stand corrected."
There's a first...
Posted by lotsamystuff | February 5, 2007 8:25 AM
Oops. I done hax0red your account.
You SUCK!
Posted by lotsamystuff | February 5, 2007 9:57 AM