Office 2010 Puts the Soft in Microsoft

Audiences may have quickly embraced Microsoft's (Nasdaq: MSFT  ) Windows 7 last year, but they have been slower to give Office 2010 a bear hug.

Retail tracker NPD Group is characterizing consumer sales of Office 2010 as "a bit disappointing" in its first two weeks on the market.

In terms of units and dollars, NPD reports that Office 2010 lags behind what Office 2007 raked in during its initial two weeks of retail availability.

There's plenty riding on Office 2010. The productivity suite franchise was a drag on performance during Microsoft's latest quarter. Without the software giant's Windows operating system division,  revenue would have actually clocked in with a slight dip during the period.

Office 2010 -- available for corporate installations in May and in its retail boxed version last month -- should have taken the Windows 7 baton and run with it, but it's not surprising to see a slow start when Office 2007 and even Office 2003 are perfectly capable platforms for current users.

"The one strong opportunity for Microsoft and its retail partners is to add installations onto PCs where once the productivity software choice was Works or nothing," NPD suggests. It points to Best Buy's (NYSE: BBY  ) Next Class PCs that came pre-installed with Office 2007 last summer.

There's also the cloud-computing threat. Google (Nasdaq: GOOG  ) Docs and Oracle's (Nasdaq: ORCL  ) Open Office provide free alternatives to commercial, PC-stored solutions. They may be simplified and require connectivity, but that may be just enough to fit the needs of casual users.

NPD doesn't see the Web-based upstarts as a problem -- for now.

"It is a virtual certainty that the slower than expected initial sales of Office 2010 have nothing to do with free alternatives," the company writes in its blog. The roadblock is mainstream consumer awareness that cloud-based freebies even exist.

That will change, of course. At the very least, Microsoft's triple-digit ransoms for its products may be history in this apps-driven economy. The highest-grossing download for Apple's (Nasdaq: AAPL  ) iPad has been Pages, a $9.99 word processing program that is compatible with Office 2010's Word.

Most consumers may not realize that free -- or nearly free -- alternatives exist, but the inner penny-pincher and viral marketer in us all won't keep that quiet for long.

Will Web-based productivity suites ever surpass computer-based software programs? Share your thoughts with me in the comments box below.

Best Buy and Microsoft are Motley Fool Inside Value recommendations. Google is a Rule Breakers pick. Apple and Best Buy are Stock Advisor choices. Motley Fool Options has recommended a bull call spread position on Best Buy. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of Best Buy, Google, and Oracle. Try any of our newsletter services, free for 30 days.

Longtime Fool contributor Rick Munarriz didn't upgrade to the last Office update, so he's not sure if he will take two steps up this time. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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  • Report this Comment On July 15, 2010, at 8:51 AM, IndianInk wrote:

    The competition from OpenOffice, Google Docs and Zoho is just amazing.

    Hard to beat such value, awesome products being given for free.

    Linux in General and Ubuntu in particular is like a double whammy for any monopolistic player, a great OS alternative that is free and bundles OpenOffice standard.

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