Sony dumps Microsoft for StarOffice

By the end of the year, Sony will include version 6.0 of StarOffice on most consumer desktop PCs sold in the United Kingdom, France, Spain, Germany, Austria and Switzerland, according to Sun. Microsoft's Works package is currently used on most of those PCs.

The deal makes Sony the first top-tier PC maker to use StarOffice and marks another dent in Microsoft's dominance of office applications, a market led by Works and its more expensive business-oriented sibling, Microsoft Office.

StarOffice, Sun's commercial distribution of its open-source OpenOffice package, includes a word processor, spreadsheet application and other common office tools. It has become one of Sun's most visible efforts to erode Microsoft's dominance over PC computing.

Canadian software maker Corel was the first to make recent headway against Microsoft in the market, announcing deals earlier this year to put its WordPerfect software on PCs made by Hewlett-Packard, the North American arm of Sony and others.

PC makers have been motivated largely by cost. With profit margins for PCs squeezed almost to nothing, software represents one of the most significant opportunities for cost cutting.

Jonathan Eunice, principal analyst for research firm Illuminata, said PC makers can make those choices because both WordPerfect and StarOffice work well with documents in a variety of formats, including Microsoft's widespread .doc extension.

"There used to be all sorts of compatibility issues," he said. "Now you can send things between StarOffice and Microsoft Office beautifully."

Simon Phipps, chief technology evangelist for Sun's European office, said that recent court restrictions on Microsoft's licensing practices have also encouraged PC original equipment manufacturers (OEMs) to experiment.

"The thing to note here is that since the close of the antitrust remedy, OEMs are feeling more secure in making non-Microsoft choices for bundling," he said.

Neither Sun nor Corel will disclose how much they're charging PC makers for their office applications, but pricing is believed to be too low to offer much chance for direct profit. Instead, the companies are looking to seed the market, driving business for upgrades and enticing major business customers to consider Microsoft alternatives.

"The way Microsoft took over this market in the first place was by taking over the consumer end and letting consumers sway the business market," Phipps said. "We're on something of the same path. Increased consumer acceptance of StarOffice is definitely going to have some sway with business buyers. And when corporate customers look at StarOffice, they're going to see it's cheaper and the licensing terms are much easier to manage."

Microsoft representatives did not immediately respond to requests for comment.

Sun versus Corel
Rob Enderle, an analyst for research firm Giga Information Group, said Sun has the potential to steal a bit of market share from Microsoft. But the real loser as Sun advances is financially troubled Corel.

"In the first half of the year, we saw a lot of moves by Corel," he said. "Now Sun seems to be collecting all that non-Microsoft activity."

"This positions Sun directly against Corel," Enderle added, "and Sun's in a much better position to fight this battle. Sun really has to push Corel out to take a good shot at Microsoft. They need to get all of the alternative business."

Steve Houck, executive vice president of strategic relations for Corel, said Corel had a good relationship with Sony but was hampered in competing for Sony's European business because it doesn't have a full array of non-English versions of WordPerfect.

"Currently, we don't have localized versions of WordPerfect for all those regions," Houck said. "I'm confident we'll be able to expand the relationship with Sony and other PC makers as we do come out with those versions."

Houck agreed that Sun was Corel's main competition in the office software market but said Corel's advantages include better relationships with PC manufacturers and other hardware partners.

"Even though Sun has deeper pockets, we don't have a hardware business that sometimes competes with the people you're trying to work with," Houck said, adding that Corel also has a stronger brand. "When people think of the 'other' office suite, they think of WordPerfect."

Enderle said Sun is succeeding by marketing StarOffice as a fresh alternative to Microsoft. "Especially in areas like Europe, where you've got a lot of people torqued at Microsoft, it comes across as something that's trendy as opposed to just cheaper."

Sun faces competition from itself on the price side, however. OpenOffice, the free, open-source software StarOffice is based on, is already offered on some low-end PCs and is likely to spread, said Illuminata's Eunice.

"I absolutely believe that just as server vendors have driven their software costs to near zero by bundling (open-source server software) Apache, the PC makers will start to decide that OpenOffice is good enough," he said. "The economy-driven vendors have already made that jump, and that's going to encourage other PC makers to take a look."

Phipps said that while OpenOffice is a good option for certain segments of the PC market, mass-market PC makers will still want the support options and proprietary add-ons that come with StarOffice.

"A company like Sony would rather that we join the open-source community for them," he said. "With StarOffice, they get all the benefits of open-source, without the burdens of having to join the open-source community."