Microsoft is preparing an aggressive push into cloud-based productivity applications with the upcoming release of Office Web Apps and other products, but the company is moving more cautiously when it comes to creating mobile versions of these products.
Office Web Apps is part of Office 2010, which is scheduled for release to corporate customers on May 12, with general availability expected sometime in June. The online productivity suite includes free, web-based versions of Word, Excel and PowerPoint, and Microsoft hopes the release will counter inroads into the productivity market made by Google and others.
"We have to be the leaders. We have to be the ones who make the tough decisions, drive the disruption and lead the industry in what we're doing," said Stephen Elop, the president of Microsoft's Business Division.
For now, Microsoft is still a follower when it comes to online productivity applications.
A 2009 survey by market research firm IDC found growing usage of Google Docs with 20 per cent of respondents saying that Google Docs was widely used within their organisations. By comparison, a similar survey done in 2007 found that Google Docs was widely used by 6 percent of organisations.
But coming late to the market with its own online productivity suite hasn't hurt Microsoft. The same 2009 IDC survey that found rising usage of Google Docs among companies also showed there was no negative effect on the market share of Office, suggesting the web-based applications may be acting as complements, rather than substitutes, for client productivity suites - at least for now.
The role of web-based productivity applications could change over time as companies become more comfortable with them, eventually turning to them into replacements for desktop software.
Elop described the impact of cloud computing - a catch-all term that describes hosted computing services offered over the internet - on the corporate IT market as an example of "constructive disruption", and said Microsoft has to walk a fine line when it rethinks how applications are deployed and used.
"When I think about those moves, I have to do so in a way that brings along for the ride 500 million customers of Microsoft Office, for example. That's how many people are out there using that product on a daily basis or with some degree of frequency," Elop said.
The large installed base of users makes Office a critical source of revenue for Microsoft. During 2009, Office sales exceeded $17 billion, representing nearly 30 percent of the company's overall revenue. As a result, Microsoft wants to be sure that new versions of Office that can be accessed online or using mobile phones enhance, and don't jeopardise, this business.
"The quality of the experience has to be unquestionably consistent with, as good as, and aligned with everything that people already know," Elop said.
In Microsoft's vision for how productivity applications evolve, users will edit and move documents between their personal computers, the internet and mobile devices, without losing any of the formatting or structure of the documents.
"We talk about the best productivity experiences being those that are a combination of the PC, the phone, and the browser," he said.
Mobile versions of Office will be available for Windows Phone handsets, due later this year, as well as for Nokia smartphones running Symbian, and eventually MeeGo, Elop said, predicting that 200 million to 300 million Nokia handsets will be shipped with a mobile version of Office installed in the years ahead.
However, Microsoft has no immediate plans to offer mobile versions of Office for Research In Motion's BlackBerry handsets or Apple's iPhone. "We think hard about which scenarios need to be enabled on what devices, and at what point in time, because we have limited resources," Elop said.
"We'll consider other environments as we proceed, but there's no ambiguity that there's a requirement to consider each of these different platforms as our customers guide us," he said.