Early Office 2007 Retail Sales Exceed Predecessor

Office 2007 release week retail sales jumped 108.6 percent in terms of units and 106.3 percent measured in revenue compared to Office 2003.

The data reflects the "launch of Office 2003, released on a Tuesday, compared to Office 2007, released on a Tuesday," said Chris Swenson, NPD's director of Software Industry Analysis.

Microsoft launched Office 2007 on Jan. 30 and Office 2003 on Oct. 21, 2003. Some important distinctions:

• Office 2003 launched for businesses and consumers on the same day. Microsoft released Office 2007 to businesses about two months before the software appeared on store shelves.
• Office 2007 launched during a relatively slower sales period of the year than did Office 2003.
• Office 2007 benefited from a massive marketing campaign and simultaneous retail launch of Windows Vista.
• Microsoft released new Office versions, including several high-priced SKUs.

The big change was in the mix of versions. With Office 2007, Microsoft replaced the popular Student and Teacher Edition with Home and Student. The new version has broader licensing terms and replaces Outlook with OneNote.

Before Office 2007's launch, Student and Teacher Edition made up about 80 percent of retail productivity sales. Post launch, the ratio for the new version dropped about 10 percent, according to NPD.

"It could be an indicator that Microsoft pulling out Outlook will drive some businesses to higher versions," Swenson said.

There was presumption that, given Student and Teacher Edition's huge market lead, that many small businesses also purchased the software. Outlook's removal would diminish the new version's appeal.

Besides retail sales, NPD also released Office 2007 first month commercial sales. In units, Office sales increased 61.3 percent year over year and sizable 97.8 percent in revenue. The revenue change represents a $56.62 ASP (average selling price) increase--up 22.6 percent to $301.33.

"The introduction of some of the higher-end versions of Office are driving higher ASPs," Swenson said. "There is greater impact in the commercial channel than in the retail channel."

Part of the problem is marketing.

"I think Windows Ultimate will do better in the retail channel than Office Ultimate," Swenson said. "Microsoft hasn't done a good job communicating the value [of Office Ultimate]."