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July 30, 2007 3:41 PM

Office: Go Smaller To Get Bigger



Can Microsoft finally crack open the consumer and small business markets for Office? Maybe this time around.

Success here also could underscore efforts overseas, as Microsoft seeks to turn customers using pirated software into those actually paying for it.

During last week's annual Microsoft Financial Analysts Meeting, Jeff Raikes, president of the business division, outlined a three-prong strategy for increasing Office market penetration among consumers and small businesses:

  • PC attach rate of Office trials that could be later converted to the full product.
  • Legalization efforts, which would include converting so-called pirated versions into licensed ones.
  • Increased usage of the software's features, whether on the desktop or in conjunction with online services.

While Microsoft has largely tapped out the market for mid-size businesses and enterprises, there are plenty of new customers to be had among consumers and small businesses.

Office Trial Conversions
"We've had 6.6 million Office trial downloads since launch, and we have 22 million PCs that have the trial preinstalled," Raikes told financial analysts. "So this is a great opportunity, definitely [a] high-growth segment of our business where more and more customers are actually getting the chance to try the product, liking it and then adopting it."

OEMs and system builders preload the Office trial software on new PCs. Consumers use the software for a limited time period, typically 30 days, before it expires. They would then have the option of purchasing a code to activate the software.

The number of people converting Office trials to full product increased 196 percent between 2004 and 2005 and 105 percent between 2005 and 2006, according to NPD, a market research firm. Those are big numbers and signs of a hugely successful program.

Microsoft Office Milestones

Get Them Legal
"A large percentage of the people using Office in the consumer and small-business area actually haven't paid for Office," Raikes said. "And so we can come up with ways to smartly help people to pay for using our products in these segments."

It is a carrot and stick approach. But rather than offer the carrot, Microsoft takes it away. Microsoft now restricts access to Office Online goodies to customers that have validated Office through the Genuine Advantage program. For years, Microsoft put no restriction on who could use Office Online.

No doubt, casual piracy is a problem for Microsoft. Much of the U.S. piracy is, in fact, casual; consumers or small businesses installing a single copy of Office on multiple computers.

While Microsoft software piracy rates are higher in places like China, by volume piracy is significantly higher in the United States. In some ways, Microsoft benefits much more by reducing piracy here than abroad, in part because of the higher piracy volume and the higher margins reaped here compared to many emerging markets. So, Microsoft has much to gain by getting paid here for every Office installation.

Worldwide, Microsoft estimates that about half the copies of Office in use are pirated. That's a lot of moola Microsoft would like to get.

A few years back, I heard a Microsoft executive, who has since left the company, talk about the "Big Mac" index. The idea: Big Macs don't cost the same everywhere, and likewise software could sell for more or less in different markets.

Microsoft's challenge now is to get paid everywhere. Increasingly, the company makes pricing concessions, often with reduced functionality, to turn pirates into paying customers.

Increased Usage
Microsoft's efforts to drive up Office adoption link to anti-piracy and emerging market strategies—and to making the Big Mac index real. Microsoft has started packaging Office differently for some other markets, with surprising success

"We had 30 percent year-over-year revenue growth in our finished packaged product business," Raikes claimed. "And a particularly good example of our success there is that we doubled the number of Office consumer license sales in Europe, Middle East and Africa with the Office 2007 launch."

Much of the success in this markets came from the new Office 2007 Home and Student Edition. There, the Office group is doing what the Windows team wouldn't: offering a low-cost family license bundle.

Like Office 2003 Student and Teacher Edition, Home and Student can be activated on up to three PCs. The cost is low—about $149 in the United States—but I expect some hefty discounts during the back-to-school season. Where's a real Windows family pack?

"We've got great traction with piloting new packaging and business model approaches," Raikes claimed. "A couple [of] more examples that are exciting are [that] we have Office prepaid cards in key emerging markets. That increases attach. It's a way for the customer to have a lower upfront cost to get into using Microsoft Office. We're using direct sales models to university students to increase their usage of genuine products."

But there's something hugely missing in the packaging approach: Windows Vista. Consumers, IT managers and small business owners are similar in that they buy applications, not operating systems. Office 2007 shouldn't be one sale, but two. But Microsoft has created little synergy between Office 2007 and Windows Vista.

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Comments (35)

chips :

Theres no need to pay MS for an Office Suite. There are many good ones out there for free. OpenOffice is very good and free. MS Office is really an overpriced piece of spyware now (with the wga features built into it) and should be avoided like the plaque.

Joe;

The WGA feature is nothing new to MS Office. The WGA has been in place for some time, since (at least) version 2003.

Of course, I am one of the lucky ones, I purchased the software, but it's 100% deductable and the new version is the best yet in my humble opinion. I've tried Open Office and some others including the latest in the WordPerfect line and they all pale in comparison, especially the open sorce varieties.

I am a power user and use everything from Access, Excel, PowerPoint, and Word is my bread and butter. The improved tools and performance is a wonderment but go hand in hand with my latest Adobe products (CS3).

I know I maybe a minority here, but I always preferred MS Office, the corperate world uses MS Office, and all the businesses I deal with nationally and internationally uses MS Office. So why would I want an inferior product?

If I was only writing a few emails, and recepies like a good many do, I wouldn't need to have MS Office and one of the free lacklusting products such as Open Office 2.x would do just fine -- I wouldn't need to pay for a stellar product line (again my own opinion.)

Like I said in other posts, if you (really) want to be productive in the corperate world such as I and my small business is, use what will get you around and I cannot afford the Open Source routine.

chips :

To Douglas S. Taylor :
Would you agree that you sir are more of a power user and that for at least 80% of the public, software like OpenOffice, or others, are the better deal?

Tratte Tor :

Fixed all my problems with MS Office after installing OpenOffice from OpenOffice.org
Workes like a charm at home and at work.

Neil :

Chips
Douglas S. Taylor already said he was a "power user". And MS Office is better for his needs. I can also understand his point regarding 100% tax deductable, and in that case ms office is the best value, you get everything you need at once.
I myself use office 2003, everthing I need (or will need in the future).

Chips, you don't have a job, so why would you need Microsoft Office anyway?

chips :

WOW! (not Vista WOW) These Micro$erfs Shills really get riled when you say anything offkey about M$ cash cow, M$ Office.

Could it be that whats hurts them the most is they know deep down that most people are just wasting their money buying M$ Office when OpenOffice will do everything the average user needs to, and for free, without the WGA and the painful install and hunting down the serial number, etc.

I don't think most Windows users will become unglued over a comment about Office, unless their boss works at Redmond, or they themselves own a lot of stock in M$.

And now I just found out that accordingly to Andre, I don't have a job. Maybe I could get a job at that cyber print shop he runs with Windows Vista? Funny, I know its possible to run a printshop with Windows software, but Andre, printshop mostly use Mac OS X for that, its been one of Mac's strong points since the beginnings. Printshop have been a niche of Mac's. Then in cyberland, its possible to be anything, and still be a M$ Shill too, I guess.

It is funny how Andre and Neil seem to be of one mind. Oh well, guess its like they say, great minds think alike. Too bad the two of you could not come up with even one original thought between you.

"printshop mostly use Mac OS X for that, its been one of Mac's strong points since the beginnings. Printshop have been a niche of Mac's."

Which rock have you been living under for the past 20 years? Corel Draw was the first graphics app released for Windows in 1987, PageMaker came after along with popular applications such as Quark and Adobes product lines which have been available for Windows for so many years. Stop talking crap, the platform does not always define the applications developed for it. I am currently reviewing Adobe Creative Suite 3 which I am running on Vista and XP. So don't tell me crap. People who choose to do design on Mac do it because of choice, but there is no difference in features or functionality, Windows is just as powerful running Photoshop.

Popular magazines like Layers even feature their tutorials running on Windows. :P Even Adobe admitted that PC's were better than Macs, but this was prior to the Intel transition.

But, I can't believe you really said all Print Shops only use Macs. Unbelievable! You really are a dimwit. As for Office, check out eWeeks latest SUN ODF plug in, buggy crap, produced by the the Open Source community as usual.

"without the WGA and the painful install and hunting down the serial number, etc."

Painful install? Stop talking crap, you say you use Linux and OpenOffice, how would know what its like to install Microsoft Office if you have never used it? The CD key is located right inside the product case, the same place you store the CD you idiot. WGA only affects you unless you are pirating or using pirated software and you said "hunting down serial number" which proves to me again you are using Microsoft software. You can type 5 paragraphs in a minute, but you find it hard to just type 25 letters. Hypocrite! And WGA was implemented until Office 2007, which proves you are indeed using the latest Microsoft software. Liar, liar.

You say Neil and I can't come up with an original thought, well you can't tell the honest truth Chips, that you are a lying hypocrite. You keep digging your self in a hole. Thanks for giving us an idea of the hypocrisy that thrives in your Open Source world. Again, stop calling me a Microsoft Shill you IDIOT!

chips :

Get it right Andre, I said most, not all
Quote;
"But, I can't believe you really said all Print Shops only use Macs."

Did I say I never tried MS Office, there you go again putting words in my mouth. What I said was basically I perferr good free software than paying any company for something that dosen't do anything for me that I need.

Your supposedly being from a poor company makes me wonder exactly who is using pirated software? You imply its me, but I use OpenOffice and Linux, which is free, so that only leaves you and your 15 computers at the Printshop, correct?

I pay for my software, here in the USA, you better. Its one of the reasons I moved to free open source software, the upgrade cycles with MS are becoming too expensive.

mgo :

I agree that it's just the Right Thing to pay for a product, even to an amoral entity like Microsoft. The Office Home and Student is rather good, mainly because it has OneNote which really is a terrific program...not just for students taking class notes but for anybody who wants to journal or just do some writing.

Home & Student lacks Outlook, which is not missed anyway.

One problem is...to run Home & Student on XP one also needs to install Windows Desktop Search which is flat out awful unless you do some tweaks and hacks to stop the endless hard drive thrashing and modify the hideous interface. On Vista, that problem isn't as bad.

Neil :

Chips
WOW you are bit of an idiot !!!
Why ... simple ..you ignore what everyone has said so far here and go on your usual rant regrading $hills, etc.
Speaking of original thought my dear Mr. Chips you are like are "Broken record" as I have just said regarding your $hills and M$, are you that envious of microsoft getting money for their software, so you "spit the dummy(pacifier)" and call people names.
If people wish to buy software it is their own choice and they make that decision not lightly either.
As people have said here Open Office is good ...but ..if you want something a little better you buy MS Office.
I am frugal with my money but when the situation requires a solution you don't go for something that "just" does what you need, you get something that will help you with anything else that may crop up.
As Doulas S. Taylor said MS Office has everthing that he needs and what you chips refuse to look at ... it is also tax deductable !!
Lastly may I say that you are trying to get personal with this, which is just what you had a go at me for ...in other words "keep it nice" and you don't have to get personal when you find that (instead of me) you are losing the arguement.

chips :

Get right with MS Andre, pay them if you use their software.

The WGA feature in Office has been widely reported online. Someone in my line of work will know about it. I do not own, or ever plan to own, MS OFFICE 2007, just don't need it. Cost too much.

You and Niel, are so much alike, I believe the parts are interchangable. The only question is, which one is the smart one?

We pay for our software, we own a Open License agreement in addition to any new system we purchase comes preloaded with a fully legal copy of Windows Business client. If you want proof, email me and I will provide you with a receipt and Certificate of authenticity.

You are now using discrimination to attack my country saying I am pirating software. Geez, how low can you get? You are a racist, thats exactly what you are. You are an ignorant SOB.

You are using Linux as a facade to protect your crappy personality. Stop getting a hard on over people with successful lives.

chips :

Ok, I figured it out, Neil is the smarter one of the two. It was at first a close race.


Sounds like you have been cornered because you can't defend your stupid arguments. I assume you will be reinstalling those pirated copies of Vista and Office 2007 sitting on your desk in the next 10 mins.

I am seeing a pattern, a failure to defend your Linux so you attack an individual. Are you that weak?

Neil :

Chips
Plenty of people are willing to pay for the software they use ... aren't you ?
Or is everthing you use for free ?
People don't just pay for MS software you know, are you against all the other companies that "sell" software?
IBM, Xerox, Intuit, Adobe, MYOB, Lavasoft, Norton, Cyberlink and the list goes on... Are you against all of these companies, or do you just dislike Bill Gates and no one else.
If not for Xerox there would be no Apple OS, chips people inovate things so they can make money and (of course) help people, but they are certainly not going to do it for free, even in the free software area, if you want something better you have to pay for it.
Lavasoft for example with "Adaware" for personal use "FREE", want more features you pay for it. The more features you want, the more you pay.
They make money out of their software, are you against them too?

chips :

to Andre;
Quote;
"I assume you will be reinstalling those pirated copies of Vista and Office 2007 sitting on your desk in the next 10 mins."
--------------------------------------------------
Now that is why Neil is winning the smartness test between the two of you. First you accuse me of being a MS hater, and then a Linux Lover. So how could I, or would I even want to run Vista and MS Office 2007?

Both products are crap as far as I have seen them on custermers computers. Remember, I fix them, so I am somewhat familar with the software, but that is why I would never use it myself.

Why would I pay for crap software when I can get good software for free that is not a huge viral magnet? Go back to Redmond, and report your failure to one of the Monkey Boys underlings.

Neil :

Chips
How many times does Andre have to tell you that he doesn't work for microsoft ??

chips :

Actually, I was offered a free legal version of the Vista Basic DVD by a custermer, never used, still sealed. Turned it down gracefully, as I would never use it.

My computers have to work with the fewest amount of problems. Windows was a lot of work making it do that, but it could be done with past versions, but not as stable as other systems. XP was about the most stable of Windows systems, but not as stable as a nix system. However, the maintance required to protect Windows, constant updating, virus, trojan spyware type protection programs and scanning, is time consuming. I don't miss it. Niether do I miss not giving M$ more of my money this upgrade cycle for a crappy line of software, Vista at the top of that line. Have other things to spend the money on, rather than making the Rich, Richer.

chips :

Neil;
Quote;
"Plenty of people are willing to pay for the software they use ... aren't you ?
Or is everthing you use for free ?"
----------------------------------------------------
Perhaps now you are starting to get it? You can use 100% free software and love it. Not everyone has to be a slave or serf to the Micro$oft Monopoly.

You can save your money for more important things in life, than buying software with a lot of bugs, and virus prone.

Not everyone has your kind of money Neil that they can afford to rush out and buy Vista to upgrade their computers, or worse MS Office for that matter. We all don't work at MS and get employee discounts.

The IDIOT (Chips) speaks!

"Both products are crap as far as I have seen them on custermers computers. Why would I pay for crap software when I can get good software for free that is not a huge viral magnet?"

To come to those conclusions you must have interacted "used the software". Hypocrite liar. Jealous over money, you worship money, thats all you live for.

I notice that you specifically target Microsoft but don't lay the same hypocrisy on other Company's that also license software with regular upgrade cycles:

"IBM, Xerox, Intuit, Adobe, MYOB, Lavasoft, Norton, Cyberlink and the list goes on"

Why didn't you respond to that? Its obvious you have some personal vendetta against the Company. Were you an employee there and were caught selling discounted employee software in the Microsoft parking lot and got fired for it? Did you apply for a job on the ancillary staff and failed the interview?

Keep digging that hole Chips.

Neil :

Andre
Yes I did notice that Chips said nothing about the other companies.
From one of his comments it seems that Chips only uses "free" software and that's it.
I think that he would have one hell of a time finding good enough anti virus software.
I thought my point on Lavasoft's "adaware" program was a valid one, and Chips said absolutely "nothing".
Probably too good a point for him to say anything against.

Richard :

I find the vitriol spewed out by Andre and Neil very annoying. Especially Andre. Let's be civil here, please.

Regarding tax deductible: that doesn't mean free. You still have to pay some money.

It goes without saying that if you have a genuine need for MS Office, you should get it. If you're a power user, if your business depends on tight integration with Office, if you need to exchange documents with clients, etc.

But let's be realistic. The vast majority of Windows users simply don't need the full power of MS Office. So why pay for it? Just in case someday you might need to use one of its more advanced features? Don't be a dope.

I've been burned by this kind of thinking in the past: buying more than you need just because you might need it someday. But that day never comes!

For most Windows users, OpenOffice.org is more than good enough. In fact, I have it installed on my Vista machine. And soon I will recommend that one of my physician clients install it for his office. We can all save a bundle this way...

Regards,
Richard

Mike :

Richard, you are absolutely correct: "I find the vitriol spewed out by Andre and Neil very annoying"...

Here is why: I, as well as many other people, enjoy reading the articles posted on this website. But then, you scroll down to see the comments below the article or to make one of your own and, like clockwork, there is a narrow-minded (sometimes completely irrelevant) comment made by Chips, which is followed by one by either Andre or Neil.

Look, understand me here that this is my opinion, and I fully support voicing one’s own opinion, but it gets extremely irritating when that same opinion is voiced over and over again. Guess what, we get it, and we just don’t care to hear it anymore!

One of you (Chips, Andre or Neil) need to end this childish game you are playing. Just voice your opinion and agree or disagree, but don’t go on calling each other “stupid”; you sound like a bunch of 10-year old kids. You are not getting your points across to anyone but yourselves, and if you think you are, you are very mistaken.

Grow up and realize that you are not the only ones reading these articles. You are ruining a wonderful site.

--------------------------------------------

As for my opinion, and you can take it anyway you want to, Richard is correct on more than just the above subject:

“It goes without saying that if you have a genuine need for MS Office, you should get it. If you're a power user, if your business depends on tight integration with Office, if you need to exchange documents with clients, etc.
But let's be realistic. The vast majority of Windows users simply don't need the full power of MS Office.”

Perfectly said...

Ed T :

“It goes without saying that if you have a genuine need for MS Office, you should get it."

And in most of Asia they do get it -- for about $1.

Then they laugh at idiots in the US and EU who pay hundreds of dollars for the same thing. This is the conundrum that keeps Steve Ballmer awake at night.

chips :

You cannot post anything here unless it glows about microsoft without Andre and Neil attacking you. After awhile you will attack back. Just human nature.

Marco :

I think that everybody (I am among them-mea culpa-) has to recognize that happened yesterday is not constructive and is going to destroy what makes the difference in this forum (as fun as it might have been.) I am going to try to only give my point of view and perhaps some short explanation (if it is necessary or required and suitable) it is not possible that we are falling in barbarism, it's no possible to accept insults because we give our opinion. I recommend to all people who are reasonable in this forum to take in consideration this idea, and the rest is in your hands Joe .
But although what happened was not a good thing, some ideas were interesting:
One of them:
Chips; The cost of a standalone full version of Vista Ultimate (or Office for the way) cost almost as much as an average user in a poor country makes almost all year....?(my excuses Chip, I edited the words in bold)
It is a important point, I lived some years in a country of third word and I was witness as the software excessively priced widened the breach between socio-economic stratus (if here-first world- it is difficult to pay some prices, imagine in those countries) and by extension, between countries, The response? piracy, but the price of piracy is very expensive, as the pirate is looking as a social benefactor, the moral rules and those countries are severely affected
with a social cost which cannot be calculated, with immediate repercussions to the level of its creativity: books, software, ideas: all is piracy (its true that some dictatorial governments turn this situation in advantageous; china,etc-but this is the exception) if it was hard to create before, imagine how hard it would be then.
Does this signify that software should be free? No necessarily, maybe it could be better (free for people, not for business) but we live in the real word ( the better is give free software and charge for service ), people have the right to be paid for their work, but NEVER to get rich in an absurd manner (like Ms) by taking advantage of their equals. That is why I disagree with Ms, amongst other things. They have damaged the social structure of third world societies. And they are not to blame indirectly (by selling expensive software) but directly in the sense that they endorsed piracy to avoid competition getting a share of the market. They used all the possible maneuvers, including bribing politicians to do so.
Apparently, now Ms wants to redeem itself by selling a bundle of its software to the poorer countries for $3. That would have been excellent years ago, but at the moment it is obviously a maneuver to avoid other software as linux expanding. This reflects MS such as it is.
Bill Gates: "It's easier for our software to compete with Linux when there's piracy than when there's not,"

chips :

Marco,
The $3 starter edition (highly crippled BTW) is sold to only some governments, for them to resell to students, not necessarily the general public, if I have that right. Mostly its been offered to Asians countries like China. Not sure that any country (government) has bought any yet. And I am almost sure that the country that Andre's claims to be from has not bought any starter editions.

Actually, I would say that the flames, here are not hurting MS Watch at all. If fact, a little controversy, is usually a good thing for the readership base. People may say they don't like it, but still read it and post. Without some controversy, this would be a dry site, and not worth reading.

If you noticed, Joe Willcox got more posts, and fame, back when he was posting about MS and the channel numbers back in maybe February (somewhere around that time). The point is, if Joe puts on the white gloves, and posts only nice stuff about MS, he becomes just like the other bloggers on the web. Who might meet the standards of Neil and Andre, put who wants to read a rubber stamp article from the pages of microsoft.com? I don't, I want articles that will make me think. I do believe that some of the posters (of course not all) here, are trying to make Joe not post anything that puts Microsoft in a bad light. Even feel that they have been somewhat successful in that regard.

I will continue to make my points, (as long as Joe lets me) some not relevant to the posts, but I notice those who complain the most about my relevancy to the post, also post non relevant posts as well.

If you noticed, Joe Willcox got more posts, and fame, back when he was posting about MS and the channel numbers back in maybe February (somewhere around that time). The point is, if Joe puts on the white gloves, and posts only nice stuff about MS, he becomes just like the other bloggers on the web. Who might meet the standards of Neil and Andre, put who wants to read a rubber stamp article from the pages of microsoft.com? I don't, I want articles that will make me think. I do believe that some of the posters (of course not all) here, are trying to make Joe not post anything that puts Microsoft in a bad light. Even feel that they have been somewhat sucessfull in that reguard.

I will continue to make my points, (as long as Joe lets me) some not relavent to the posts, but I notice those who complain the most about my relaventcy to the post, also post non relavent post as well.

Marco :

interesting point Chips , I will think about.

chips :

MS is on track to make 100 billion dollars this year, a record even for them. Would you not suppose a company with its track record, would not do everything it could to ensure that very little got posted on the web not favorable to them?

For example, MS attempt to change the wiki, by use of a bribe. For example, MS giving away Acer laptops to some bloggers (and no I don't mean Andre) around the time of the Vista release to get favorable comments. And yes, the use of paid shills in the comments sections all over the web.

MS has a history of going beyond the gray areas, into things that are unethical and even illegal. So why not here?

Neil :

Richard / Mike
Ok ... lets talk about this ... why hasn't chips answered my question regarding Lavasoft ?
He says that freeware is better. OK Lavasoft is BOTH.
Ny point is that freeware is not always free, and chips like free software, but sooner or later you are going to have to pay. Would you spend your time doing a program like "Open Office" never to be paid for it.

chips :

Neil,
first of all, I did anwser your questions about the IBM question. 2nd, I don't think your question, whatever it is, is relevant to the discussion of Vista and Linux. 3rd, any question I ask of you, you ignore, and move on the the attack. So why should I anwser your questions any more.

so forgive me if I largely ignore you and most of your attacks most of the time. Sorry, but I don't seem to be able to get an intelligent conversation from you or Andre.

Ryannoyed :

WOW! I read through all the comments and I'm truly amazed at all the passion and energy chips, Neil & Andre have invested in their pointless arguments that nobody on Earth cares about. Imagine if they had used all that energy in doing something useful. What a waste :(

But I guess that's what we must expect when 3 people with a 2-digit IQ get in the same room.

Richard :

Neil, free software is not always better than commercial software. For *some* users, commercial software may have desirable features that aren't available in freeware. I will pay for software if I need to, but if I can make do with free, why not? That's why I use OpenOffice.org--it's great for my purposes and I don't need the advanced functionality of MS Office. I also use avast! antivirus--it's generally as good as Norton or most other AV programs. I have lots of terrific freeware on my Vista machine. In fact, the *only* software I've paid for is Windows Vista itself!

As for the motivation for writing free software, I guess not everyone on earth is mercenary the way you are. Some people are actually altruistic! Look at the enormous amount of excellent software in the Open Source world.

In fact, I'm currently developing a sophisticated web application using a totally Open Source software stack (Linux, Apache, PostgreSQL, Squeak, Seaside). I can completely avoid Microsoft's Visual Studio, .NET, SQL Server, IIS, Windows, etc. Not only do I save a huge bundle of cash, I also develop much faster because of the terrific quality of these Open Source software.

sani umar :

the software you issue out may not be useful to us here Nigeria, becouse the word CRACK office is became well known.
let have multiple of this office from microsoft in low price

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