Microsoft wants servers to drive Office sales

Office 12, the provisional name of the next major upgrade of the productivity software suite, will have closer links between desktop applications, such as Word and Excel, and Microsoft's server software, a company representative said on Thursday. The company is also looking to create more specialized editions of Office that address specific customers, such as small businesses or schools, and to continue the use of XML for file formats, according to representatives.

The release of Office 2003 last fall was the first time Microsoft created editions of Office that included server software components. For example, an application called InfoPath relies on a Windows server to route electronic forms between workers. Office 2003 also makes its easier to share documents through the company's SharePoint portal software.

With Office 12, Microsoft will continue to develop closer linkages between commonly used desktop applications, such as Word, Excel and Outlook, and some other Microsoft server applications. The upgrade is expected to be completed next year or in 2006.

Operation: Motivation
Microsoft's Office strategy is meant to raise revenue by creating a reason to upgrade to the new version, said Paul DeGroot, an analyst at research company Directions on Microsoft.

"It's been clear for a long time that they are really at a state of diminishing return when it comes to adding features," DeGroot said--particularly when additions are not evident to the end user, he added.

Adding features that depend on linkages between desktop and server software drives additional server revenue, particularly products such as Live Communications Server that are not widely used, he said. Richer features also allow Microsoft to continue offering an Office-centric alternative to Web-browser based client software, he added.

"The main problem is that they are not going to have immediate results," DeGroot said, because customers will need more time to deploy Office applications that use Microsoft's server software. "Over time, there's a reasonable prospect that it can provide Microsoft with additional revenue."

Microsoft is also expected to expand its use of XML document formats in Office 12. That growing reliance on XML and closer ties between Office desktop and server applications allow businesses to build more sophisticated applications, said Kerry Gerontianos, president of Incremax Technologies, which develops custom Microsoft applications.

Companies could customize Office applications in the past, but the process of tapping other data sources, such as databases, was more difficult, he said.

Office is "going to be a platform for applications. People are comfortable with Office in general so you can extend it a little bit and all of a sudden you have data flowing in and out. It's not just a Word document any more," Gerontianos said.