Sun sets $76 price tag on Office rival

StarOffice 6.0 may not be free, but it's still less expensive than Microsoft Office, which overwhelmingly dominates the office software market.

Stephen Shankland
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Sun Microsystems' StarOffice 6.0 will go on sale May 21 with a price of $75.95, the company will announce Wednesday, in a more concerted effort by the server specialist to take on Microsoft's overwhelmingly dominant Office.

StarOffice 5.2 has been available as a free download since Sun acquired the StarOffice product line in 1999, but Sun said earlier this year it would charge for the new version and provide better support for customers using it.

It may not be free, but it's still less expensive than Microsoft Office, which overwhelmingly dominates the office software market with a 95 percent share, according to Gartner Dataquest. The basic version of Office has a retail cost of $479, with an upgrade cost of $239 and an educational version for $149.

"This is positioned as a low-cost alternative," said Cheryln Chin, vice president of business development at Sun's Software Systems group. Sun is specifically planning to sell StarOffice to large businesses, education customers and governments.

You get what you pay for, counters Microsoft. "Customers are telling us that value is more important than price. Society is full of cheap alternatives," Nicole von Kaenel, Product Manager Microsoft Office, said in a statement.

For both StarOffice and Microsoft Office, customers buying the product in large quantities get a price discount, with StarOffice costing between $25 and $50 per copy. StarOffice is available for educational customers at the cost of the CD, instruction manuals and shipping.

Sun and Microsoft are constant thorns in each other's sides; Microsoft has worked to exclude Sun from industry collaboration while Sun has taken its complaints about the software rival to court in the form of a private antitrust lawsuit.

Santa Clara, Calif.-based Sun generally tries to undermine Microsoft by moving computing power to the large central servers at the core of Sun's sales, a move that demotes PCs to a mere supporting role. This time, StarOffice is a direct challenge to Microsoft's business.

There are more costs than just the initial purchase fee, though, all agree. Gartner puts the price of switching a Microsoft Office user to StarOffice a $1,200--costs that include factors such as retraining, lost productivity and the difficulties of translating StarOffice files to and from Microsoft formats.

Sun's Chin acknowledges there are retraining costs, but argues "it could be lower than $1,200" and that Microsoft isn't exempt. "Anyone on Office 95 or 97 switching to Office XP is going to have the same retraining cost," Chin said. "Macros are different, file formats are different, the user interface is slightly different."

Microsoft asserts it isn't working on any responses to the arrival of StarOffice--though it perhaps wasn't a coincidence that the company chose this week to announce that customers had purchased the right to install 60 million copies of Office XP.

"We are focused on bringing Microsoft Office to the next level," von Kaenel said. "Competition is good for the industry. It keeps us on our toes and reminds us that we have to earn our customers every day."

But Microsoft is running into problems with those very customers. The Redmond, Wash.-based company has run into resistance to a subscription plan that would let customers pay an annual fee for Office updates instead of a per-upgrade charge. Many customers complained that the change effectively raised the price.

Chin said 1.8 million users are testing StarOffice 6; thus far about 70 percent to 80 percent of testers have adopted the product. Customers include the Burlington Coat Factory, A.B. Watley, the city of Nanaimo in British Columbia, Canada, and Paros Software.

Sun doesn't have a dedicated StarOffice sales force. "We will be piggybacking on top of existing sales folks," she said.

While Sun has a formidable sales force, it typically sells products such as storage systems and servers, not office software.

StarOffice is based on the same software as OpenOffice, an open-source project that is developed by Sun and others. The programming code underlying the OpenOffice product may be freely changed or shared under the terms of the Lesser General Public License (LGPL), a stark contrast to the tight proprietary controls over Microsoft Office.

One major change of the new version of StarOffice is that individual programs such as word processor, spreadsheet and presentation software can be launched separately. In 5.2, it was all or nothing. The new version also uses XML-based file formats that aren't proprietary like Microsoft Office documents.

The new version of StarOffice will be distributed with versions of Linux from MandrakeSoft, SuSE, Turbolinux and others, Chin said. Sun is in discussions with the top Linux seller, Red Hat, and hopes for a "favorable outcome," she added.

By virtue of Windows' dominance in the desktop market, though, most copies of StarOffice will likely be used on Windows machines, she said.

Sun is working on a future version of StarOffice--an extension of the server-based StarPortal and SunONE Webtop versions that run on central servers rather than on PCs. This new version will be in testing at customer sites by the end of the year, Chin said.

The new server version is being rewritten to take advantage of new Internet software standards called Web services, an initiative in which Microsoft is leading the charge.

News.com's Joe Wilcox contributed to this report.