Foley on Microsoft

Resisting the Siren Call of Software as a Service

Sometimes, the unfashionable choice is smart the smart one.

• By Mary Jo Foley
• 03/01/2007

I'm not talking about file-format battles here. I realize there are customers, many of them in the international-government space, who have strong opinions about whether the Open Document Format (ODF) or Microsoft's Office Open XML (OOXML) is preferable. However, because I almost never hear from ODF-based office-suite users -- unless they are sent my way by OpenOffice advocates -- the ODF versus OOXML contest doesn't really concern me.

The battle over software-distribution mechanisms is far more interesting and lively. And when it comes to Software as a Service (SaaS) versus software plus services -- the latter being Microsoft's software-delivery strategy of choice -- I think the Softies are doing the right, albeit unfashionable, thing.

Eclipsed by Google?
One of the questions that I'm asked repeatedly by users, resellers and Microsoft competitors is whether I believe Microsoft is falling behind Google and the rest of the Web 2.0 pack by failing to offer Microsoft Office and/or its individual components in the form of hosted services. Isn't Microsoft Word a dodo when compared to Google Writely? Excel a dismal failure compared to Google Spreadsheets? And is PowerPoint now just a shadow of its former self when stacked up against Google's Presently?

All the best productivity apps soon will be delivered exclusively as services, according to the collective wisdom. And Microsoft is stuck in fat-client quicksand.

Again, I have to say I beg to differ. I regularly ask Microsoft customers whether they want their word-processing, spreadsheet and presentation technologies delivered in the form of a service. Business users say no way. Even small business customers and individual end users are iffy on the concept of productivity apps delivered exclusively as services. In short, Microsoft is doing what the majority of its customers want in delivering Office as a PC-based productivity pack.

Microsoft also is doing what makes sense for its own bottom line in resisting the temptation to move too early to a SaaS model with Office. Even though many customers complain that Office is bloated and expensive -- and cling to older versions claiming they are "good enough" -- Microsoft continues to make a lot of money from Office sales. Windows and Office are still the company's biggest cash cows, even today.

Dipping Toes into Water
At the same time, Microsoft isn't sitting around idly, hoping that the SaaS tide will reverse itself. The company has been experimenting in a limited way with hosting Office via deals with service providers and other channel partners. The Redmondians also are dabbling in small-scale software-rental trials at $15 a month for all the Microsoft Office you can eat in South Africa, Mexico and Romania. They've also stuck a toe in the Office services waters via Office Live, a collection of both free and paid small business services designed to supplement Office. (On the Office Live side, there've been some pretty pointed critiques of Microsoft's support policies, so there's plenty of room for improvement.)

Microsoft is also experimenting with services in a couple of other, under-the-radar ways. On its Office Online Web site, Microsoft offers a number of Microsoft and third-party product updates, add-ins and freebies as downloads. (Microsoft officials refer to these downloads as "services.") There are links to Office Live from the Office Online site as well. It wouldn't be surprising to see Microsoft use the site to test-drive other free and/or paid Office services.

Then there is the expanding family of SharePoint-based services, specifically Excel Services, InfoPath Services and PowerPoint slide libraries (and perhaps Access Services some time soon, my tipsters say). Microsoft refers to the browser-based viewers for these services as "Web companions."

Is Microsoft digging its head in the sand when it comes to SaaS? While the Web 2.0 crowd would say yes, I believe the Redmondians are doing the right things for themselves and their customers -- at least in the area of productivity apps.

Do you agree? Or would you like to see more of Microsoft's Office applications delivered as services -- and sooner rather than later?