The Redmond, Wash.-based company is attempting to make Office System more attractive to larger businesses as demand for desktop application software begins to slow.
In March, Microsoft, which includes Office 2003, Project and other software. Directions on Microsoft analyst Paul DeGroot described the branding as an attempt make Office a "platform" that developers and businesses can use as a base for custom applications and business processes.
"As Microsoft moves to brand Office more as an enterprise business tool and less as personal productivity tool, we will see moves like this occur more often," said Jupiter Research analyst Michael Gartenberg.
Under new branding announced on Monday, Microsoft's business portal software will be called Office SharePoint Portal Server 2003. SharePoint, which offers collaboration tools intended to help companies enhance employee productivity, is primarily used to create private, companywide information Websites for employees or business partners.
But in order to use that software, businesses will have to first move to, a new server operating system that launches April 24.
"Yes, you do need Windows Server 2003 (to run SharePoint)," said Erik Ryan, Microsoft's product manager for SharePoint Portal Server. He said the added collaboration technology "makes the upgrade absolutely worth it."
The portal software also relies on features found in many other Office System products, such as Excel, Outlook and Word, so users will have to buy them to get the full benefit from SharePoint Portal Server.
SharePoint Portal Server is in beta testing. Microsoft plans to release the final version this summer, Ryan said. The company has not released pricing information.
Adding a server product to the Office System family could increase the legal scrutiny of Microsoft's business practices, analysts warned. The European Union continues an antitrust investigation into charges that Microsoft used its dominance in desktop software to gain a foothold in the server market.
"This (move) could be of concern for those who care about Microsoft's past antitrust (issues)," said Rich Gray a Menlo Park, Calif.-based antitrust attorney that closely follows the European Union investigation.
Gray said antitrust law enforcers would follow the move closely if "Microsoft's strategy is to use its full range of product offerings as part of a plan that reinforces barriers to entry around its monopoly product while extending the power of its monopoly into other product areas."
Upgrades on Microsoft's mind
The rebranding of SharePoint with Office highlights the longstanding problem Microsoft has with how to enhance the value of the productivity suite. Bulking up the features of this release is important because of the large number of businesses using older versions of the software.
A Marchconducted by Yankee Group and integrator Sunbelt Software found that 32 percent of existing Office users plan to upgrade in the first 12 months after version 2003 ships. About 5 percent of earlier adopters run Office 95 and 44 percent use version 97, according to the study.
Because the market for Office is saturated, adding new features to the desktop software may not be enough to drive upgrades. The company is banking that adding more features from the server software to Office will make that suite more appealing to businesses.At the same time, Microsoft would increase sales of other products. For example, to harness the full potential of SharePoint Portal Server, a company would also need to purchase Office, Windows Server and BizTalk Server.
"It is kind of unusual for a server product to leave the server fold," DeGroot said. But given that Office System is now part of Microsoft's Information Worker division, looked another way, the change makes sense.
Certainly, the portals created by SharePoint are about sharing information. SharePoint empowers the creation of portals, which would reside on a company's Intranet or extranet, for individuals, divisions or the enterprise. A business might make one portal for getting out sales or human resource information, while smaller groups might create portals for collaborating on projects. Individual employees might create personal Web sites viewable by anyone or private ones with information on salary and vacation time.
"SharePoint has its greatest utility for people that need to access corporate information from their desktops," DeGroot said.
The underlying collaboration technology used in the portal software also is used in Office XP and 2003. In March, Microsoft changed the name of its collaboration technology tofrom SharePoint Team Services. But the two SharePoint names--portal and services--has caused some confusion.
"SharePoint Portal is a product. SharePoint Services is a technology," Ryan said.
SharePoint Services is heavily integrated into Office 2003. People working on a project might use the technology to create a shared document work space for collaboration purposes. All members of the shared work space would be able to annotate or change the documents, with the full history of changes available to all participants. SharePoint Portal Server uses the technology to create similar collaboration work spaces on personal or division Web pages.
DeGroot speculated that because of SharePoint Services and the number of client features, many tied directly to Office, "Microsoft said why not let the Office client team handle the product."
Blurring the lines
But the change raises questions about other Microsoft server products where there is significant overlap between client and server software.
"What about Exchange?" DeGroot asked. "What do people use it for other than Outlook?"
In fact, Microsoft is expected to release Exchange Server 2003 concurrently with Office 2003, because of the timing of Outlook's availability. Like SharePoint Portal Server, a testing version of Exchange Server 2003 ships in the Office 2003 Beta 2 kit Microsoft is distributing to about a half-million businesses and individuals.
The blurring between Microsoft's client and server products may only increase as the company pushes further into the enterprise, say analysts. Microsoft's drive to deliver support for Extensible Markup Language (XML) in Office System could contribute to this blurring. Many companies, including Microsoft, are using XML to deliver Web services.
"While there are nice features that are part of the traditional Office productivity tools, the real story behind Office 11 is XML integration and the ability to share and collaborate beyond mainstream office communication," Jupiter's Gartenberg said. Office 11 is the codename of Office 2003.
The Yankee-Sunbelt survey of technology managers found that 10 percent of early adopters of Office System were making the switch "as a forerunner to Web Services," said Yankee analyst Laura DiDio.