June 22, 2006 5:18 AM PDT

Office upgrade hard to justify, warns analyst

Only companies that are signed up to Microsoft's Software Assurance plan are likely to adopt Office 2007 in the near future because IT managers find it extremely hard to justify an Office upgrade to their board, according to analyst group Gartner.

Speaking at the Midsize Enterprise Summit in Paris on Wednesday, Gartner analyst Annette Jump said research done by the group showed that only about 2 percent of companies that weren't signed up for Microsoft's Software Assurance plan had adopted for the previous version of the productivity suite--Office 2003.

The software assurance plan ties companies into automatic upgrades of new Microsoft software at a discounted rate. The plan was updated late last year after coming under fire for allegedly locking users into buying unnecessary Windows upgrades.

"Very few companies will be able to justify buying Office at full price, which shows the importance of SA to Microsoft. Only 2 percent of companies surveyed last year who were using Office 2003 weren't on SA," Jump said.

Companies should quantify carefully how moving to the next version of Office will benefit their users, Jump said. Unlike the move to Windows Vista, which the analyst claims can be staggered--supporting two or more versions of Office is prohibitively costly.

"We believe that many companies will have to do a forklift migration with Office 2007, as supporting two versions of Office is very complex and will be too complicated for most," Jump said.

Office 2007 will include several new features, including an all-new user interface and new XML-based file formats.

Microsoft will offer new editions for the workplace. In the Professional Plus version, Word, Excel, PowerPoint and Outlook are augmented with the Access and Publisher products that come with the Professional edition, the Office Communicator instant-messaging program, InfoPath form creation software, and server-based content management and forms management capabilities.

There will also be an Enterprise version, which adds Groove, the collaboration program developed by Ray Ozzie that Microsoft acquired last year. Users who get the Groove desktop software have the choice of running their own Groove server or subscribing to a hosted service.

Jump added that few companies will be in a rush to deploy Office 2007 immediately, as many have only recently installed Office 2003. Although Office 2007 will run on Windows XP, most companies will probably look to have Vista installed before migrating to it.

"Office 2007 will only catch 10 percent of Microsoft's installed base by the middle of 2008, as only a small percentage will have moved to Vista by that point," Jump added.

And depite Microsoft's claims that Office 2007 will have improved graphical interfaces, the costs of supporting the suite through a help desk will actually increase in the short term as users become acquainted with new features, according to Gartner.

"They are trying to make it much more user-exposed, and the menu will change depending on what activity you do," Jump explained. "In the first few months, the cost of help desk support will go up despite the fact that Microsoft says the graphical interface will help drive down calls."

Companies that have a conservative approach to technology and aren't planning to integrate Office 2007 into their core business process may even choose to skip the release altogether or deploy it much later, Jump said.

However, she added, all companies will be required to deploy converters to ensure that their users are able to interact with early adopters of Office 2007. "All of you will have to deploy converters later this year or early 2007," she told her audience of IT professionals.

Andrew Donoghue of ZDNet UK reported from London.

See more CNET content tagged:
Software Assurance, Microsoft Office 2007, Groove Networks Inc., Microsoft Office, Gartner Inc.

52 comments

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MS or Oil who is charging to much
Get smart you get mad at Oil profits 5 to 10 percent
Microsoft 27-45%

Who is the bad guy here

Go Open office share the truth
Open office does everything 99.9999 people can use.
Posted by kvhcnf (2 comments )
Reply Link Flag
Man, forget all that
Have you been to the movies lately? $6 for a small popcorn that's only half popped?

There's your bad guy right there.
Posted by Christopher Hall (1205 comments )
Link Flag
Profit margin!
Here is a list of companies and their profit margin. As you can see from the list MSFT's profit margin (even though very high) is not much more than the Redhat, which sells 'free' software!


Software: (margin is generally higher than hardware companies)

Redhat (sells 'free' software): 28.63%
Microsoft: 31.59%
Adobe: 23.13%
Oracle: 23.15%


Hardwar:
Apple: 9.97%
Intel: 20.46%
Cisco: 20.59%
Posted by pdude (65 comments )
Link Flag
M$$$$$$$$$$$$$$$$$$$$$$$$$
I'm not buying Vista or 07. Mac.

c:\windows\dead
Posted by paulsecic (298 comments )
Link Flag
No One Is Charging "Too Much".
It's whatever the market can bear. Simple supply and demand economics.

And people are stupid enough to stick with an over priced product instead of going with a cheaper/free product (i.e. OpenOffice) than the fool and its money SHOULD be soon parted.
Posted by kamwmail-cnet1 (292 comments )
Reply Link Flag
Correct
You have hit the nail on the head. If MS can do it that's more power to them. Any business that rushes out just to have the latest software isn't watching their bottom line. I'm sure Office 07 will be a good program, and competition is a good thing. But, free is still 100% more money in my pocket at the end of the day.
Posted by guynamedalex (17 comments )
Link Flag
Waste of time and money....
MS has really screwed the pooch this time. We don't need Vista,
most of us couldn't run Vista, and there are no Office
improvements which justify any sort of upgrade. MS has given us
two dogs of software, and we're expected to be good little sheep
and fork over the money to keep MS profitable.

Not hardly. Even the dumbest PC owner can spot this flying fraud.
Posted by Earl Benser (4310 comments )
Reply Link Flag
Vista
Actually the requirements of Vista are exagerated. I am running it on a four year old Celeron 1.7 with only 256MB. It runs bad, but it does run. Thus, any recent machine with 512MB should run it OK, and 1GB should be good. Remember also that it still is beta code and would be full of debug routines, and thus the finished version will be tighter code.
Posted by Andrew J Glina (1673 comments )
Link Flag
Waste of money
Is what MS is all about.

I still use Win2k Pro / Office 97 at home. At work we have Win
XP and office XP for most boxes. Really though, I haven't seen
any reason for the office XP upgrade. People talked about
document compatibility, but with the exception of a few access
databases I haven't seen anything that office 97 can't open.
Posted by shady28 (17 comments )
Link Flag
My Company Can't Afford to Upgrade
We just (2005) upgraded our network to XP/O2003 S2003 Exchange 2003.

Most of our office computers couldn't run Vista alone, much less the new flavor of Office. I don't know how most companies operate, but the Dell Dimension "entry level" type 60GB HD/512MB RAM/P4 works just fine for running Word, Excel and the accounting dept's accounting system client software.

Why should I lay out more cash to upgrade hardware, simply to run their software that I don't need to upgrade in the first place? Really, my accountants could still do their jobs with 2000Pro and Office 97.
Posted by ratzo (3 comments )
Link Flag
Missing the point.
Why you should upgrade? And why its good.

Vista is just great! It looks way better than XP.

You got Live services with it, and you can even port your
Samsung Origami product to eat for easy tranfer of data. Plus
Office 2007 is way better than the previous upgrade, look and
feel wise. And it has gadgets.. if you haven't tryed it already than
your in for a real treat, once you've tryed it. Plus its got flip 3d..

Man it just kicks ass! Watch out Apple.. cause Vista is here!!!
Posted by ServedUp (413 comments )
Reply Link Flag
LOL
Spending hundreds and thousands of dollars, not too mention the lost productivity during the hardware and software upgrades, just to have a new look and feel + plus more bloat? Most people don't use even half the features of office.

Yeah, Apple is scared of a poor imatation that takes more hardware to run and is still extreme insecure.

There is no reason to get either Vista or Office 2007, unless you are a completely clueless MS fanboy.
Posted by qwerty75 (1164 comments )
Link Flag
Re: Missing the point
The analyst warns that there is no business case for an upgrade. Is there a business case hiding somewhere in your comment? Who is really missing the point here?
Posted by b3timmons (6 comments )
Link Flag
Gadgets?
Oh boy it had gadgets! Yippie.

Business really don't care about gadgets, or 3D effects, etc. Software is a tool, nothing more. If the tool doesn't solve a problem or make work easier, what's the point.

As for Vista kicking ____, you have to be kidding me, what Vista? Oh that Vista the Vista that keeps getting pushed back and back and back.

I'm not a Mac user (yet) but claiming Vista is here and its great is a total joke.
Posted by guynamedalex (17 comments )
Link Flag
Missing the sarcasm.
I'm not sure what's funnier... your sarcasm ... or the fact that the majority or news.com readers (properly conditioned by MS propogranda) seem to not be aware it was sarcasm.

;-)
Posted by open-mind (1027 comments )
Link Flag
Of course it's hard to justify
That's why piracy is so rampant. People don't want to shell out hundreds of dollars for a single update to a program.
<a class="jive-link-external" href="http://www.techknowcafe.com/content/view/365/42/" target="_newWindow">http://www.techknowcafe.com/content/view/365/42/</a>
Posted by mystereojones (46 comments )
Reply Link Flag
WGA
If I purchased Office 2007 legally, will it load on my illegal copy of XP? I think Ill try to load office 2007 on an illegal windows machine just to see if it would load. Problem I find here is for those who do have pirated copies of windows, Office 2007 may not load and for sure, it wont update.
Posted by GaryLuis (3 comments )
Link Flag
This issue makes it a non-starter for my 1k users...
The new version of MS Office is still a security threat to any network it is running on, relative to every other office product on the market. The only thing MS Office brings to the table unique to other office products is Microsoft Macro Viruses. Other office products we are testing are also being found to be more reliable, stable, secure, and compatible with the widely used standard file formats we have to deal with.
Posted by 206538395198018178908092208948 (141 comments )
Reply Link Flag
Use Open Office
Its File Format is actually an approved standard. If you have used Office then it is easy to pick up, and it works how YOU want it too; not how MS wants you too.

I actually use OO myself in an Office 2003 environment and no one knows the difference. The only problem is that it does not allow shared documents, which is kind of a pain when you need too but is used very rarely.
Posted by umbrae (1073 comments )
Reply Link Flag
Open Office
I've been using them side by side for over a year now, nobody knows or cares that I use OO. But when I can rip a file into a PDF they wonder if I have bought Adobe... I just smile.

At home we all use Open Office, kids do their homework on it, use Impress for presentations and the whole time I love how much $ I have saved to spend on other things.

MS can update office all they want, I won't be making the jump and won't be approving a purchase of the new version. The old versions do all that we need to do. I don't need fancy graphics, I need a solid piece of software that gets the job done and doesn't cost me and arm &#38; a leg.
Posted by guynamedalex (17 comments )
Link Flag
"Office upgrade hard to justify, warns analyst"...
... how so, when there will be many, many more millions of users (outside of the United States of America) of Office products that may be looking for functionalities that are not now integrated in either Microsoft Office or Open Office; much less generations X,Y,Z... around the world who have not yet been "exposed" to the Office Suites market place of which Microsoft's control approximates 90% plus!
Posted by Captain_Spock (894 comments )
Reply Link Flag
Many millions of users outside the US can't afford it.
They would rather stick with the older MS Office versions or use OpenOffice.org. And with integrated WGA, piracy will decline to all time lows, and along with it, installed base outside the US.

And those millions outside the US aren't exactly tripping over themselves to get those "new features."

In the third world, most users can't even use the features in Office 97. Even basic features like tabs and line centering (tip: using spaces is not the way to center a line).

Are these the millions who will be tripping over themselves to get Office 12?
Posted by Maccess (610 comments )
Link Flag
Let's compare this stuff...
Well, let's see. We've got three office suites vying for your productivity dollars and/or loyalty. They are:

M$ Office @ $400.00+
Corel WordPerfect @ $300.00+
OpenOffice.org @ Free/*Donation

Two are proprietary, one is Open-Source.

The proprietary suites will take you to court if you attempt to change their code or distribute the program to any other system other that the one it was bought for. Open-source encourages your input, change, &#38; its distribution.

The proprietary suites are expensive, even though they have bugs that could either comprimise your system, or cause a shut-down of your system. Open-source finds the bugs and glitches usually within a week of detection, and someone in the open-source world usually creates either a work-around, or a fix in that timeframe.

Proprietary suites take years to be re-worked and work-arounds or fixes come about once a month...if at all.
The open-source community issues fixes as bug reports come in, warns their user base of potential problems, and re-works the code about every 6 months.

The cost of the two proprietary suites are cost-prohibitive for business, while the open-source model is cost-effective, and is totally compatible with these proprietary suites.

If a business, or individual user contributes any funds to an open-source offering, those funds go directly to that offering for its benefit and its progress. The proprietary suites may, or may not use the funding for that project. Those funds usually goes to pay for other things, like advertisement.

Open-source has the best advertisement in the world. Word of mouth. Nothing spreads faster than good, or bad news. Well, OpenOffice.org is great news! Not only does it do all that it should as an office suite, but is downloadable, tranferrable, and they won't sue you if you replicate it onto another system, or 1,000 systems for that matter.

Open-source encourages your donations to their cause, but never forces you to contribute. You contribute what you can. That is the most cost-effective model of all the suites.

In summary: Here is an office suite upgrade that is entirely justifiable. Whether your a business, or an end-user looking for a cost-effective office suite, the choice is dramatically clear. Openoffice.org is the winner, hands down. Try it now! Go to www.openoffice.org, and see what all the buzz is about!

I switched two years ago, and I am so glad I did!
Posted by Jon N. (182 comments )
Reply Link Flag
Office upgrades usually a waste of money
Even most Office users like myself don't see a need for the new features. I've heard studies that say most people use 10% of what Office can do. Why would I want to upgrade so I can not use 95% of what Office 2007 can do?

I think Microsoft's biggest competition is the older versions of their software. If something is "good enough", users won't want to pay hard-earned money for an upgrade (and to upgrade their systems to support the software, and retrain their users).

And if I did want certain features, I'd look at OpenOffice and the likes first. I'd rather spend more time learning something new than hundreds of dollars PLUS more time learning something new.
Posted by bluemist9999 (1020 comments )
Reply Link Flag
MS Office vs. OpenOffice
OpenOffice is a great product. It will meet the needs of most home users and of many companies, but Office has some advantages:
1. For some large corporations, the cost of MS Office is insignificant compared to their other software/hardware purchses.
2. MS Office has some very handy things in it:
--Word's Compare Documents feature, with bubbles in the margin showing the changes
--Excel's PivotTables, a wonderful way to analyze certain types of data
--Macros that can let people do certain tasks in minutes instead of hours
--A host of Outlook features
3. Tight integration with other MS products, such as SharePoint
4. MS Office is the de facto standard. If you're using it, you can bet that every other major company will have someone who can read or edit your files.
Posted by vidanuevatx (34 comments )
Reply Link Flag
Not an MS Office vs. OpenOffice.org debate
The issue is not about Office and OpenOffice.org.

The MS Office features you've described are all in current versions of MS Office. The point of the article is whether or not users (whether Office 6, Office 97, Office 2000, Office 2001, and other Office brnads) find a compelling reason to upgrade.

Heck, Microsoft has already had a hard time convincing Office 97 users to upgrade (ref: The Dinosaurs ad campaign).

"MS Office is the de facto standard. If you're using it, you can bet that every other major company will have someone who can read or edit your files"

The file formats of MS Office are the de-facto standard, not the program itself. That's why most other office suites can open read and edit those files.

If someone sends you a Word or Excel file, are you 100% sure that MS Office was used to make and edit them?
Posted by Maccess (610 comments )
Link Flag
Outlook is not a plus for MS
tried using Outlook 2003 with the BCM plug-in and found it a terrible PIM or CRM, however you wish to classify it. Try Chaos Intellect from Chaos Software... it's Outlook on steriods. i have recently switched to Intellect, OpenOffice and Firefox (Thunderbird is great, but Intellect makes it unneccessary) and i couldn't be happier... now i'm thinking of learning about Linux for an OS and i'll be MS free!
Posted by marc.jefferson (1 comment )
Link Flag
Feature Comparison correction
In your list of features in MS Office, you listed Pivot Tables, as if that were an exclusive feature. It is not; OpenOffice.org also has it, called Data Pilot. I know, because I was the first to request the feature.
Posted by mjneedles (1 comment )
Reply Link Flag
 

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