Microsoft Word: At 30, the word processing package is king, but threats abound

Network World - It is 30 years old and dominates the word processing market, but Microsoft Word is now more than ever fending off challenges from the cloud where less expensive and even free alternatives pose new threats, experts say.

Google Docs, IBM Docs and Apache’s free OpenOffice Writer are relatively well known but not-so-well used alternatives that vie for Word customers, largely without undermining Word’s solid base

[QUIZ: Word at 30 

BACKGROUND: Google Apps vs Office 365]

The problem for competitors is that Word has ruled word processing for so long that most people are familiar with how it works and recognize the value of using it because its documents can be read nearly ubiquitously, says Michael Silver, an analyst with Gartner.

There’s a core set of capabilities customers want, and they have very little interest beyond them, Silver says, making it hard for the competition to lure customers away with new features. “The problem is people view word processing as a commodity,” he says.

The flip side is that alternative word processors could pick off customers because they offer those core capabilities cheaper. “Why pay so much to do what a much less expensive product can do for you?” he says. For example, Office Professional 2013, which contains Word, can be downloaded for $261.50 from Amazon.com; OpenOffice, which contains Writer, is free.

Price doesn’t seem to force shifts in loyalty, though, because in a Word-dominated world, when someone receives a Word document, they want to see it as it was created to be, and that requires Word. “There is no other product that can maintain the fidelity of a document created in Word,” says Silver.

This difficulty that challengers face is borne out by a recent Forrester Research survey that polled 155 IT decision makers about use of office productivity suites. Two years ago, the survey found 13% supported OpenOffice or a variant; this year that number was 5%, and that included an offshoot of OpenOffice called LibreOffice, according to “Office 2013 And Productivity Suite Alternatives”, written by Forrester analyst Philipp Karcher.

In the survey, 77% say it’s important that whatever suite of office productivity apps they use they must be compatible with Office formats.

Within a year, 38% of those surveyed say they will be using the latest version, Office 2013, although most of them that already use an earlier version say the upgrade comes with their current license. Still, for about half of respondents the migrations take 12 to 18 months, which signals a commitment to the suite.

Alternatives such as Google Docs and IBM Docs that are Web based pose a different challenge, but Microsoft has countered with Office Web Apps. These packages support word processing via browser, and Google is formidable. “Web versions of Word have much less functionality than Google Docs,” Silver says. “In the past few years customers have moved to Web Office on tablets but don’t get the experience they were looking for. It has three or four tabs with different functionalities to choose from, but the native version has nine tabs.”Word remains the standard, though. Even these competitors use compatibility with Word and other Office apps as a selling point.

“Whether starting from scratch or making use of existing Microsoft Office … you and your team can use IBM Docs to work together…” an IBM promotional video says.

Office 365, which includes packages ranging from online-only access to apps to both online and desktop versions plus other services, can match offers from a range of competitors. According to Microsoft, it is doing well; in less than two years it is a $1.5 billion business, and its subscriptions account for 25% of Office 2013 sales. “Office 365 not only allows access from anywhere, it guarantees Microsoft regular subscription income from customers,” Silver says.

Microsoft is trying to drive business customers to its cloud offerings because they automatically provide the latest versions of the applications that customers might otherwise skip, says Karcher. “They say, ‘that doesn’t deliver us increasing business benefits,’” he says. The licensing costs of upgrading each time for Office vs the cost of Office 365 is about a wash, but the subscription model guarantees Microsoft a revenue stream.

“The idea is for customers to continually pay for access rather than make a decision three years in advance if they want to [deploy the new version in their own data centers and] get an upgrade with a discount,” Karcher says.

Microsoft is trying to perpetuate the Word habit by offering low-cost and free versions of Office 365 to students. University students can get a four-year subscription for $80 and colleges that subscribe to Office 365 for faculty and staff get it for students, too, at no extra charge.

Word as bundled in Office continues its success, but is definitely being threatened, Silver says, especially as PC sales slip and tablets and phones become more popular computing devices. “The mobility wars will certainly shed light on what’s going on,” he says. “This includes whether and when Microsoft develops an iPad version of Office and whether that version supports the full range of features and functionality.”

Microsoft has said it’s delaying an Office for iPad version until it fully optimizes Office for its own Windows 8.1 touch-centric operating system, effectively forcing iPad customers who want to use Word on the devices to subscribe to Office Web Apps.

Meanwhile, Microsoft has to deal with plotting a future course for Word to add new features without upsetting customers who have grown comfortable with the app as it is. For example, in 2007, Microsoft changed the interface to make features easier to find, but long-time users complained things had changed and they couldn’t find their favorite features in the new places, Silver says. “Word is the poster child for the innovator’s dilemma,” he says. “If Microsoft makes big changes to Word, it won’t be the product customers know.”

Word contains a lot of features customers never use or even know about. Microsoft adds innovations and features with every release but a lot of folks use relatively few of them and some may not even know what’s been added, he says.With the increasing influence of mobility, users are becoming comfortable with finding individual apps that serve their needs and don’t care so much about whether they have access to a suite of apps, Karcher says.

Regardless, because Word is so entrenched in customers’ minds as well as with other Office applications, it is a formidable competitor. “Microsoft integrates Word more and more tightly with other applications with each release,” Silver says, “such as SharePoint, Lync and Exchange. That broadens Word’s footprint within Office and makes the product stickier with customers by making it more difficult to move to something else.”

That translates into a formidable challenge for competitors trying to get customers to scrap Office. “None of our clients are doing that,” he says.

Tim Greene covers Microsoft and unified communications for Network World and writes the Mostly Microsoft blog. Reach him at http://gauravmahapatra.blogspot.in/ and follow him on Twitter@Tim_Greene.

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