Microsoft offers peek at next Office suite

REDMOND, Wash.--After months of remaining nearly mum about the next version of Office, Microsoft is slowly breaking the silence.

The company is still not discussing the specifics on most of the features it will add with Office 12, but it is promising to have the productivity software suite ready by the second half of next year. The company is also talking about some broad areas that it sees as ripe for improvement, including enhanced collaboration. Among the other key areas are individual productivity, finding business information and managing corporate business documents.

"There are things that are still hard as well as things that have gotten harder," Microsoft Group Vice President Jeff Raikes said in an interview.

Some things, like e-mail, have improved, but nonetheless raised new challenges. Raikes noted studies that show that the average worker gets about 10 times as much e-mail now as in 1997. That's projected to increase another fivefold in the next four years, Raikes said.

To handle that increase, as well as the rise of instant messaging and other forms of electronic communication, Microsoft is trying to develop software that can do a better job of sorting out the really important messages. The concept of setting rules that let designated contacts such as one's boss or children reach their intended recipient in a meeting while everyone else gets sent to voice mail has been around for a while, but Raikes said that scenario is getting closer to reality.

"The vision will always continue to expand," Raikes said. But "it's sort of a major leap in that direction."

For Microsoft, the need for a compelling new release is critical. Along with Windows, the Office suite is one of two cash cows for the software maker. The vast majority of the company's profits come from those two products.

Not surprisingly, Microsoft is choosing a key audience with which to first share its Office 12 plans. Chairman Bill Gates is set to discuss the software in a speech Thursday at the company's CEO Summit here, which is expected to be attended by Amazon's Jeff Bezos and Best Buy's Brad Anderson, as well as many other prominent chief executives.

The new Office edition is slated to come at roughly the same time as Longhorn, the next version of Windows. However, the company has scrapped earlier plans that would have seen the two products tightly coupled together. Office 12 is expected to run on both Longhorn and older versions, with the major changes to Office not dependent on any shifts in Windows.

Microsoft did offer a few specific features it plans to add. As part of its attempt to let workers better make sense of ever-growing amounts of data, the company is adding into Excel the ability to create

dashboards and scorecards that offer a quick way to visually keep track of just how a business is doing.

Meanwhile, in PowerPoint, Microsoft said it is working to automate more of the graphics features from within the presentation program so workers can create documents that look good without much design effort. The company is also planning to expand its use of XML as a means of sharing data with other programs.

In addition to sharing only the broad strokes of what features will be added to the Office suite itself, Microsoft is also not ready to discuss any new companion products that will be coming with the Office 12 wave of software. In the last go-round, Microsoft added its InfoPath electronic forms program as well as OneNote, a note-taking application.

Rob Helm, an analyst with Directions on Microsoft, said he expects the Information Worker unit that includes the Office business to continue to introduce new server software as a way to grow its sales.

"I think that unit's business plan, overall, is about the server," Helm said. The Office suite serves as a ubiquitous piece of desktop software upon which Microsoft can fairly easily tie new products, he said.

Raikes was circumspect when asked about Microsoft's reported plans to introduce more server software, including the possibility of an Excel server.

"I'd say with a beta toward the end of this year you will begin to get a good sense of how we are thinking of the overall set of capabilities," Raikes said. "I'm not saying what server products we will release at what time."

As for the desktop software itself, Office 12 will continue the program's evolution from one that enhances individual productivity to one that can also help cubicle dwellers work better together. Here, Microsoft is counting on advances from both its own SharePoint and Real-Time Communications groups as well as from recently acquired Groove Networks, which specializes in such software.

The company has also been working hard to position Office as a good way to connect to other business software such as customer relationship management and enterprise resource planning software from companies such as Siebel and SAP. Microsoft and SAP last month announced a joint effort, code-named Mendocino, aimed at allowing access to SAP data using both the Excel and Outlook components of Office. Meanwhile, Microsoft had an internal effort, known as Project Elixir, in which its own sales force used Office's Outlook program to access information in its Siebel system.

"That offers a glimpse of relief," said AMR Research analyst Jim Murphy. Large businesses, which have been increasingly narrowing their key software vendors, are anxious to see the remaining companies collaborate more, Murphy said. But Murphy noted that customers are also skeptical, seeing the large software players as still angling for each other's turf.

Analysts also said Microsoft cannot afford to focus solely on collaboration and business process automation given that a significant chunk of sales are to small businesses and consumers. With Office 2003, too many of the new features were aimed at that crowd, said Directions on Microsoft's Helm.

"They can't invest all of the improvements in Office in group work," Helm said. "One knock on Office 2003 is that there wasn't much there for the individual user to upgrade."

And AMR's Murphy noted that the individual home user is often a corporate worker who--if they like a new version--can push their company to upgrade. Whereas it often takes big businesses a long time to move to a new version of Office, consumers often move quicker, typically by purchasing a new PC with the latest version of the software installed.

"This is actually a good sort of marketing for Microsoft," he said.