Microsoft Focusing Office Suite On Web Services

Microsoft, seeing it's growth beginning to slow in the office sector, plans to reinvent the way people work, communicate and collaborate on projects by retuning it's Office Suite toward web services.

"Office defines business productivity," Bill Gates, Microsoft's chairman, told financial analysts in July. "The productivity area is probably the most important franchise that we have." Microsoft is banking on the Office initiative to help it fend off the challenge from open source software and other competitors.

"Microsoft is trying to make Office less a product and more like an online service," said Nate Root, an analyst for Forrester Research. "Adoption is going to be slow because Microsoft is trying to change the paradigm. It's a fundamental cultural change in how people think of and use Office." Because the next version of Windows, called Longhorn, may not ship until 2007, analysts say, the Office overhaul is needed in the meantime to deliver more Web services technology to the desktop. The new capabilities in the Office system are also needed to lure software developers to create more applications that run on Microsoft products.

Challengers like Sun Microsystems' StarOffice, OpenOffice.org and the Open Source Applications Foundation offer free or very inexpensive alternatives to Microsoft's Office programs. At the same time, Microsoft faces strong competitors in the collaboration field. IBM (NYSE: IBM) , for example, has sold Web conferencing, Web-based work spaces and other software for years, and leads in some market segments.

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