The world's most popular suite of applications programs got a sleek new look last Thursday when Microsoft launched the first new version of Office for Windows since June 1999. And whether users like Office XP or not, it could well give Microsoft a $3.6 billion boost, according to Chris Le Tocq of Guernsey Research, partly because of changes in corporate licensing terms.
Office is already Microsoft's biggest money-spinner, and brings in about $8 billion a year: roughly a third of Microsoft's annual revenues. It is a bigger business than Kellogg or Apple, and not far short of Colgate-Palmolive. If many of the 250 million users of Office applications can be persuaded to shell out £200 (including VAT) for an upgrade, that should make a noticeable difference to Microsoft's $30 billion cash pile.
Many people will, of course, spend more. The standard version of Office XP includes four applications: Word (word processing), Excel (spreadsheet), PowerPoint (presentation manager) and Outlook (email and personal information manager). There are also more expensive versions with extra applications, including Access (database), Publisher (desktop publishing), FrontPage (website design and site management), and the all-new SharePoint Team Services, described by Microsoft as "an intranet in a box".
At the UK launch, most of Office XP's new features, such as the language translation facilities and the ability to scan simple pages or faxes and convert them to text, were not even mentioned. The built-in voice recognition was downplayed. Admittedly these are entry-level features, uncompetitive with standalone applications. However, today's mantra is ease of use. Pride of place was therefore given to "smart tags" and "task panes", which make it much easier to use features already built into Office.
Smart tags - "buttons with brains" - provide pop-up menus inside office documents. What they offer depends on the context. If you are pasting a web page into a Word document, the tag offers to paste it in the style of the page or the style of the document or as text. A button could equally well convert a number between Imperial and metric units, or look up a dictionary, or fetch data from a database or website.
Type in BA252, for example. This could be recognised as a flight number, and a smart tag could offer to fetch details from the Official Airline Guide and book your flight. Microsoft is offering a free development kit http://msdn.microsoft.com/office/xp/smarttags.asp to make it easy for suppliers to create smart tags, and users will be able to download them from websites.
A useful smart tag in Word lets you tell the software not to correct a word you have typed correctly which AutoCorrect thinks is wrong. Other smart tags work with names and addresses, telephone numbers, dates, times, and place-names.
Pop-up "task panes" are also a welcome addition. When you run Word 2002, for example, the first task pane provides links to your most recent documents and lets you select a blank document, web page or email template. Yes, you can do the same things from pull-down menus, if you know where to look. Task panes just make life easier for people who don't.
Oliver Roll, Microsoft UK's marketing director, says a study by VNU Labs showed Office XP enabled users to do things in 13% less time, saving about an hour a day. At that rate, heavy users would find the upgrade paid for itself in a month or two.
But "super users" need not worry about "de-skilling". There are still lots of neat features that most users will never find. One example in Word 2002 is the ability to save a file not just to a hard drive but straight to an online folder on MSN.
In fact, casual users may be hard pressed to tell the difference between Office 2000 and Office XP, apart from the obvious visual changes to the interface. This is deliberate. Whatever creative things Microsoft might like to do with Office, its hands are tied by the product's success. The governments and large corporations that make up the bulk of the Office market do not want to spend any money retraining staff to use a new version: the training would cost more than the software. With XP, they won't have to.
Whether it is really worth upgrading is, of course, a more complex issue. In my view, Office 2000 SR1 (Service Release 1, not the latest version, SR2) has been by far the best choice. Serious Office users who did not upgrade from Office 95 or 97 have already wasted a lot of time and money, and should upgrade to XP as soon as possible. Going from 95 to XP is like going from a Ford Fiesta to a Mercedes.
However, for people who are already using Office 2000, the benefits of XP are far from essential. Rather than a new car, it is more like having the current model resprayed, and a few optional extras thrown in.
Nonetheless, industry analysts such as Le Tocq and the Gartner Group expect a rush to upgrade to XP before October 1, because Microsoft plans to change the way it licenses Office to corporations with more than 500 PCs. Companies that join its new Software Assurance scheme will get future upgrades at lower prices.
However, SA will only be open to users of the current version, so they will have to upgrade to XP to join the scheme. And if they don't pay the upgrade price now, they will have to pay the full price for their next version.
Companies that had not planned to upgrade this year, and don't feel they need to, could feel they are being pushed into it. Still, there is nothing to stop them sticking with the version they have.
If most big companies upgrade, there will be a short-term bulge in Microsoft's Office revenues, and reduced revenues in future. The advantage for Microsoft is that, with Office sold on what is essentially a subscription basis, it will get a predictable flow of cash, instead of the lumpy income that comes from upgrades. It could also reduce the problem of piracy.
When it comes to the consumer/home office market, most of the people who need something as powerful as Office probably have it already. The problem is that they may not have paid for it. In this case, Microsoft is taking a different approach. When you install a retail copy of Office XP, it runs an Activation Wizard, which calls up a Microsoft server and records a number based on the software key from the CD and the hardware it is installed on. If you don't let it "activate", it stops working.
Microsoft says publicly that a copy of Office can be used by one individual on two machines, such as a desktop PC and a notebook. Privately, people say the company isn't bothered about families sharing discs, only cases where the same ID code is used hundreds or thousands of times. That may be true today, but one imagines the screw will be tightened in the future.
It also seems rather stupid not to have a "de-activate" feature, so that the wizard also dials up when you want to take Office off one system and install it on another. It could even have a "hardware upgrade" wizard, for when you want to change a PC's processor or motherboard.
Some people are bound to whinge about Microsoft's attempt to reduce software theft, though "activation" is not "registration" and does not involve any personal data. But it is hardly worth bothering about in countries where the government can read your email and you have no privacy online anyway, such as the UK.
