Microsoft Office under fire

A host of internet-based rivals are aiming at Redmond’s fattest cash cow.

Never mind the brutal verdict handed out against Microsoft by Europe's competition regulator on Monday. This week three rivals – IBM, Google and Yahoo! – gave notice of their intentions to compete head-on with Microsoft Office, recently the software giant’s biggest earner by far. The stalwart suite of office tools, which includes Word and Excel, accounted for revenues of $4.6 billion – a third of Microsoft total sales – in the company’s most recently reported quarter.

Gallingly for Microsoft, given its dependence on Office licence fees, much of the threat comes from software given away gratis over the internet – a dramatic departure from its licence-based model, in which software is hosted on a user's desktop machine.

IBM this week unveiled Lotus Symphony, a suite of free desktop applications that includes document, spreadsheet and presentation software.

Hours earlier, the newly acquisitive Yahoo! announced that it had bought Zimbra, a start-up that specialises in online e-mail tools similar to Microsoft Exchange and Outlook – key parts of the Office family – for $350 million (£174 million).

At the same time, on the paid-for-software front, Google, the search giant widely regarded as the chief threat to Microsoft’s dominance, unveiled Google Presentations, an online version of PowerPoint, the Microsoft presentations tool known to millions of executives around the globe.

Microsoft is in danger of loosing the Office licence fees it has milked for nearly two decades, some suggest, as customers opt for alternative subscription-based services that are hosted by providers. Its business model – built around the PC – will not survive the internet age, they argue.

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