Microsoft banks on Office XP

Microsoft is launching the latest version of its flagship Office suite today, claiming that customers "can't afford to ignore the new version".

But for a company which already has a 90 per cent share of the office suite market, the launch could mean more to Microsoft than to its customers.

Analysts estimate that the Redmond Giant will be splashing out over $700m on marketing for Office XP, Windows XP and its consumer console, the Xbox, this year.

Given that the Office suite accounted for 37 per cent of Microsoft's $6.46bn revenue last year, Office XP based on the new licensing model could bring a cash boost of around $3bn.

The main battle for Microsoft is getting users to upgrade. Neil Holloway, UK managing director of Microsoft, told vnunet.com yesterday that it was confident that users would upgrade to XP, regardless of which version of Office they are using currently.

"The new version allows people to do more in less time," he said.

Holloway also said that XP was being backed by analyst Giga, which is recommending it as an upgrade. Giga apparently estimates that around 50 per cent of the Microsoft user base will upgrade.

Holloway acknowledged that a majority of Microsoft customers were still running Office 95 or 97, and even those upgrading to Windows 2000 were only considering Office 2000.

"Enterprises try to touch the desktop as little as possible," he said. "But as Windows XP is accepted, Office XP will be too."

This may also be reflected by the fact that Office XP won't run on Windows 95 or 3.1.

He also attempted to dispel the myth that Microsoft was strong-arming customers into upgrading, countering some of the flak the company has taken over its new licensing model.

"The licence has effectively become a method of software maintenance," he said. "Four-fifths of our customers are happy with the new licences; the one fifth that aren't, are those who don't upgrade."

As far as new technology used in the application is concerned, XML is going to be big. One of the main features of Office XP is the use of "smart tags", a multi-dimensional hyperlink that could be used in Word or an Excel cell. Smart tags identify information such as a person's name with any other data available, either through your address book or on an employee file, for instance.

The possibilities here are limitless. "We're betting the farm on XML," said Holloway.