Microsoft readies delayed Office 2000 suite

Microsoft today will announce the shipment of its delayed Office 2000 desktop application suite, a cash cow expected to boost the company's revenues.

3 min read
Microsoft today will announce the shipment of its delayed Office 2000 desktop application suite, a cash cow expected to boost the company's revenues.

Office 2000 includes the latest generation of widely used business programs including Word, Excel, PowerPoint, and Access. The suite was available to large corporate customers in April and is scheduled to be in retail outlets June 10, Microsoft said.

Office 2000 makes extensive use of both HTML and XML as a file and data sharing format, intended to make the software more Web-friendly.

As earlier reported, Office 2000 will inaugurate a new component strategy and will, for the first time, include Microsoft's FrontPage Web authoring tool. It will also include PhotoDraw 2000, the company's new business graphics software.

The new Web extensions and component strategy will also make Office 2000 able to be both hosted and deployed via corporate servers and potentially by Application Service Providers.

"This is the big product for the Web," said Rob Enderle, an analyst with Giga Information Group. "Office 97 was headed in this direction, but Office 2000 is the first big view of how they are implementing their Web strategy," on the desktop.

As previously reported, Microsoft earlier this year had pushed back the release date for Office 2000, and told investors that the company would not be able to realize revenues associated with the upcoming product for its fiscal third quarter. The company said it deferred $400 million in revenue because of the Office 2000 delay.

The revenue was deferred because it can only be recognized when customers redeem coupons for Office 2000 that were received when paying for Office 97. Analysts were expecting about $4.65 billion in total company revenue for the quarter.

In all, Microsoft has more than 100 million users of Office and of individual applications found in Office, worldwide, according to financial research firm Raymond James and Associates.

Of the 100 million users, approximately 50 percent are using Office 97 and the remaining are using either an older version of Office or a standalone application, according to Raymond James.

Microsoft said four companies, Lockheed Martin Electronics and Missiles, the University of Texas, J.D. Edwards, and Turner Broadcasting Sales, have announced plans to deploy Office 2000.

While Microsoft considers Office one of its cash cows, analysts say the product isn't bringing in as much revenue as it used to.

According to investment firm Goldman Sachs, desktop applications currently account for about one-third of Microsoft's revenues, but as the market matures and the average sales price continues to decline, the growth rate of Office and related applications is slowing.

The slowing growth of the applications business may become a greater damper on the overall company's long-term revenue and earnings growth.

According to Goldman Sachs, Office 2000 may generate a renewed stronger growth that "bridges" the company over until speech recognition ships as a standard feature of Office--probably in 2000, which could help stimulate demand as well as increase upgrade rates.

Office 2000 Premium, a new configuration of the Office package, is priced at $399 for Microsoft Office upgrades and upgrades from other qualifying Microsoft desktop applications, $449 for an upgrade from non-Microsoft suites, and at $799 for new users.

Office 2000 Professional is priced at $309 for version upgrades, $349 for non-Microsoft upgrades, and $599 for new users.