Microsoft's Office head talks Google and more

Stephen Elop is convinced that even in a world of free, browser-based productivity software, consumers and businesses will continue to pay for Office.

Microsoft will bow to reality with Office 2010, adding browser-based versions of Excel, Word, PowerPoint, and OneNote. But, in an interview this week, the head of Microsoft's Business Division says that there is still plenty of life in the full version.

"At the highest level, what we're able to put forward to our customers is not just the best productivity experience, but one that spans the PC, the browser environment, the Web environment, services, and so forth, and the mobile device," Elop said. "So, it's the best productivity experience across the PC, the mobile phone, and the browser."

At its worldwide Partner Conference on Monday, Microsoft will give people a feel for how this works and is expected to start broader testing of the first piece--the desktop applications.

As for Google, Elop said that most businesses still think of Google as a search company or are just kicking the tires on Google Docs. He shrugged off the fact that Google this week brought the products out of beta.

"I've heard that the word was dropped," Elop said. "I didn't notice that anything else had changed. So I don't know if the software suddenly got better, or they just changed the name."

He also said it is too soon to have an opinion on Google's just-announced Chrome OS.

"We haven't seen it," he said. "We don't know anything other than what has been written in a blog."

In a wide-ranging interview, Elop shared more views on Google as well as his perspectives on Office, business software, and the broader economy.

What are customers asking for from Office? What's the most common thing that large businesses ask you for when you're talking to them about Office?
Elop: You know, when you boil it all down, everything we do essentially in the division, when you're with a CEO or a CIO or whatever the case may be, the base conversation is about productivity. It's about how can you help me solve this problem, and that problem often is about the productivity of some aspect of their business, of something they're trying to achieve competitively, or whatever.

Certainly in today's economic setting, cost savings comes into it. How can you help me save money in getting what we need to get done? How can you help me solve these problems, but do so in a more cost-effective way?

You mentioned cost savings. How is the business environment relative to investment in software and other technology compared to, say, when we spoke in February?
Elop: You know, when we spoke in February, I think there were a lot of people who didn't know what was going on.

I think people may not agree as to what's going on in the economy right now. Everyone has different opinions. But at this point people have opinions. And because people have opinions about what's going on in their business or their part of the economy, on that basis they begin to make plans. The plans will be different than the plans they might have had six or nine months ago, but they can actually establish a plan, and therefore a budget, and decide, OK, in our business we're going to do this, we're going to invest in these ways, and so forth. I don't want to say there's increased confidence as much as there is less ambiguity in people's minds. They've decided what it means to them.

Now, at Microsoft, you've heard Steve (Ballmer) talk a number of times about how we view what's happened as being a reset in the economy, that it's not a bounce back to the way things were, but things have reset, and things need to stabilize here even more, and then we'll see things begin to grow as increases in productivity in the economy kick in.

The product lineup that you guys are going to have going into next year, what does that add to your arsenal, particularly Office 2010?
Elop: I think at the highest level, what we're able to put forward to our customers is (not) just the best productivity experience, but one that spans the PC, the browser environment, the Web environment, services, and so forth, and the mobile device.

When people look at Office 2010 in the broadest sense, and that's both the client applications, it's the services offerings, it's the server products, it's the Web applications, all of those pieces together. Certainly what customers are recognizing as they've had pre-briefings and the early experimentation with the products is that we're at some form of generational shift into this world of software plus services, and Office 2010, I think, is surprising people as it relates to the extent to which we've fully embraced software plus services.

How do you see the balance of Web applications and desktop programs? You guys have obviously talked about it's not just about putting Office in the browser. What are the kinds of things that you think are best done via the browser, what are the things that are best done in a desktop program, and how does that inform sort of the way you guys have designed those two products?
Elop: First of all, it's helpful to look at specific scenarios. I'll just use a personal example. I was at my parents' home recently, I needed to edit a document, I hadn't carted my PC around with me. I had my father's PC connected to the Internet. I was able to use a Web application to quickly look at a document, make some lightweight changes, and pass that document along without interrupting the fidelity of the document, being a part of the collaborative experience with others at Microsoft. There's a specific scenario where the Web application played an important role.

Similarly, if you look in the mobile environment, there are scenarios related to, for example, taking a picture as part of some work that you're doing. You're unlikely to take a picture with a Web browser, or a notebook computer.

The second part of the answer, though, is that while there are specific scenarios that are best advantaged within each of the different ways of delivering our technology, the best experience comes from the combination of all of those things. So, we think less about the Web applications as standalone word processor things, and far more about it as a complement to the trio of the phone, the PC, and the browser environment. We think about the best experience being the sum of those things working well together.

Your preference, and certainly the way you guys are investing in the Web applications, is as an adjunct to the desktop, not a replacement. That said, how common do you think it will be that businesses license just the Web applications for at least a portion of their employees?
Elop: Well, we hope that it's very common to the extent that there are, let's say, workers in a business (where) today a company has said, look, there's one PC for 100 employees on a shop floor, or something like that. To the extent that they now license those workers for a lightweight browser experience in some way, shape, or form, and they're now part of the Office family, that's a positive thing for us. It brings them into the whole environment of productivity that we're trying to deliver.

So, those scenarios we think will be relatively common. It could be factory floor workers, it could be retail employees, and outlets around the world, and there are all sorts of scenarios that we think have been under-served from participating in the productivity experiences that some of these applications will serve to support.

I guess the other piece of that question is whether you expect that there will be a portion of customers that attempt to move some part of their workforce that has access to desktop Office to just browser-based versions?
Elop: I mean, by definition there will be some. Do I think it's a huge proportion? No, I don't. And the reason for that is because, particularly in that we're talking about the commercial setting, where we believe that the productivity experiences that we deliver in the rich client applications, with the Web applications as a complement to that, is still going to be a compelling experience that people are going to be saying, hey, I want people participating, for example, in collaborative editing of documents, in collaborative sharing of PowerPoint presentations, as examples.

For example, our multi-user authoring feature. There are examples like that which we believe represent improvements in productivity for these customers that are delivered through the rich client application. So while you'll always be able to point to some examples of someone somewhere making that decision, we don't believe that's going to be the dominating force.

How often do customers bring up Google apps in meetings, and is it usually when you're talking about the product, or when you're talking about price?
Elop: Customers are aware of Google in different ways. Sometimes just from a search perspective, sometimes they're aware of things like Google Docs and so forth. And our experience is it may lead to a discussion around what is software plus services, what is Microsoft's view on it. And the tendency is not, obviously in our conversation, to dwell on their price versus our price, or things like that, because it's two very, very different things.

When you put side by side, for example, the full range of on-premise and in the cloud services like Exchange, SharePoint, (Office Communications Server), and so forth, the full range of rich client applications and soon Web applications and so forth, combined with many years of enterprise support, of an understanding of how we're going to take care of mission-critical capabilities, it's a whole different conversation. And so that's why in the context of a large-scale customer who is engaging these things I think there's tire kicking, or they may look at these things, but there's a clear understanding that... enterprises have some very specific and far-reaching requirements that Microsoft over many years has figured out how to deliver.

Well, they're out of beta now, is that a significant move?
Elop: I don't know. I've heard that the word was dropped, I didn't notice that anything else had changed. So I don't know if the software suddenly got better, or they just changed the name. I couldn't interpret what it meant.

As someone who has been in this industry a long time, what do you make of Google's announcement that they're moving into the operating system realm with Chrome OS?
Elop: Well, let me just challenge the premise of your question. They've announced a couple of times now that they're moving into the operating system business, because there's the whole Android thing, and now there's Chrome.

We haven't seen it. We don't know anything other than what has been written in a blog. So it's very hard for us to know, without seeing what they're doing, to comment on it.

You have architected part of Office 2010 to run in the browser-based Office Web apps. If I'm not mistaken Chrome isn't one of the supported browsers, but it might, in fact, work in Chrome. Do you guys see Chrome as an important browser to develop for?
Elop: It depends on how you define important. From a market share perspective Chrome is very low. So I think we're driven by customers on these things. There are other browsers that have greater market share, and that's where we've concentrated our first efforts.