Here's an interesting article that does provide insight into why I am
doomed
http://tinyurl.com/l33yb
"Microsoft Brings the Works Online"
The software goliath squares off with tiny online competitors, Google,
and-possibly-itself
You might think the folks at Microsoft (MSFT ) have bigger fish to fry
than a tiny Bay Area startup named ThinkFree. The company, which offers
Web-based word-processing and spreadsheet programs, counts about 60,000
active users, none of whom even pay for the service yet. But there on
page six of Microsoft's annual 10-K filing with the Securities &
Exchange Commission, submitted in August, Microsoft lists ThinkFree as
a rival to its $11.8 billion Office business, used by more than 400
million people around the globe. "It's official now," laughs ThinkFree
CEO TJ Kang. "We're definitely on their radar."
No kidding. Microsoft, which scoffed at the rise of online alternatives
to Office, isn't looking the other way anymore. BusinessWeek has
learned that the software giant is developing a strategy to put some of
the technology from its Works software-the barebones word-processing
and spreadsheet program that often ships with new consumer PCs-at the
heart of a new online offering.
The company is working on plans to offer a free version hosted on its
Office Live Web site, as well as a subscription flavor with more bells
and whistles. While it's not a done deal, the company is throwing a lot
of manpower at the project. "It's not a small number (of people working
on the project) to be sure," says Chris Capossela, vice-president for
Microsoft's Business Division Product Management Group. "This is core.
We want to win this space."
WORKS ONLINE. Microsoft is still working out the details for its
online offering. And nothing will likely be decided until after its
flagship productivity software, Microsoft Office 2007, ships early next
year (see BusinessWeek.com, 11/18/05, "Microsoft's New Word:
Accountability"). But after that, Microsoft will likely put tweaked
versions of the Works spreadsheet, word-processing, and project
management programs on the Web.
It's a delicate dance for Microsoft, though. The company is keen to
compete with new offerings from Google (GOOG) and others that provide
free productivity applications online. But offering a rich set of
services could undermine its lucrative Office hegemony.
The services will be designed to help consumers share documents they
create and collaborate on projects with friends and colleagues, rather
than just e-mailing files around. Parents can post soccer schedules for
the kids. Small businesses can create customer contact lists for their
employees. The Microsoft brass sees it as filling a niche the company's
PC offerings can't touch. "The sharing scenario that the Internet
offers us is an awesome opportunity to do things we aren't doing well
today," Capossela says.
RISK OF CANNIBALIZATION. Bringing Works functionality to the Web is a
tricky proposition for the software giant that threatens an existing
business-with no guarantees that the new one will replace lost
revenue. To see where Microsoft is headed, look at Office Live. That
service, still in testing, offers companies Web hosting and e-mail with
a personalized domain name. There is a free version, with five e-mail
accounts, that's paid for with advertising served up by Microsoft. And
Office Live offers a subscription version, which includes 50 e-mail
accounts at a monthly cost of $29.95 once the trial period ends (see
BusinessWeek.com, 9/13/06, "Can Microsoft Out-Google Google?"). With
online word processing and spreadsheets, Microsoft would likely let
Netizens choose from basic versions available for free and supported by
ads, or subscription services with more robust features.
While there's some risk of cannibalizing Works sales, the bigger fear
is draining users from Office. While the company doesn't break out
Works sales, Goldman Sachs (GS ) analyst Rick Sherlund believes that
the retail sales of Works, at $49.95 a pop, are scant and the licensing
fees from computer makers-which he estimates are between 50 cents and
$2 a copy-don't add up to much, even when multiplied by the tens of
millions of PCs that ship with it each year. But Microsoft will tread
lightly with its online offering for fear of consumers using it instead
of Office, which starts at $149 (see BusinessWeek.com, 2/16/06,
"Microsoft's Office-Come-Lately").
FENDING OFF GOOGLE. Sherlund discounts that danger, saying Microsoft
faces a much bigger problem trying to unseat Google. The Web kingpin
generates more revenue from its search and other businesses than
Microsoft does online, and threatens to extend that lead with new
word-processing and spreadsheet services. To counter that, Sherlund
believes Microsoft should go even farther than it's contemplating and
offer much of the rich Office functionality online. That would be
costly, but would put Google on the defensive. "You need to be
aggressive in dealing with Google," Sherlund says. "Don't tie your
hands behind your back. Come out swinging. Embrace the new model."
Such a strategy would only put at risk Microsoft's sales of Office to
consumers, Sherlund figures, since businesses are typically reluctant
to put corporate documents online. That amounts to roughly 6% of
Microsoft's annual earnings-about $1 billion in the last fiscal
year-money better spent putting Google at a disadvantage.
For now, that seems unlikely. But even if it's not the giant step some
think Microsoft should take, there's little doubt that Google
Spreadsheets-and ThinkFree-are about to get some new competition.
But I guess what I really want