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The Most Misunderstood Part of Microsoft

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Oh, fear the mighty Google (Nasdaq: GOOG  ) ! Poor old Microsoft (Nasdaq: MSFT  ) will soon fail, as an onrush of cheaper business products races past the lumbering dinosaur.

Or at least that's how the story goes. Microsoft's line of popular Office products is on its way down, clutching at a past history of successes and resting on its former laurels, while consumers move to cheaper offerings from Google, Apple (Nasdaq: AAPL  ) , and Zoho. However, if you think Microsoft is about to fail, I have a little secret to tell you.

The secret (don't pass it on)
You're wrong. Yes, you're very, very wrong. Today's story line will center on researcher NPD's reports that Office 2010 sales are "disappointing." But those with fears based on early Office 2010 sales are missing a key opportunity.

Truth be told, it's no big surprise that early sales of Office 2010 aren't a smashing success. For the most part, Office is a mature line; it's hard to improve on past features. By all rights, the line should be drawing decreasing sales as Apple and Google catch up with its capabilities.

However, as I sat at Microsoft's massive Worldwide Partners conference this week, I couldn't help but feel that business unit was following a shrewd strategy. On stage, Business Division President Stephen Elop laid out a vision for a suite of interacting Microsoft programs. It was a big plan, it was a bold plan, and it just might make sense.

Microsoft's secret sauce?
The plan? Build out a host of business applications that connect together, and make them all accessible through the cloud. Customers are looking for simple, interoperable solutions. Microsoft has been moving toward the idea for a while, but it's now aiming to deliver these cross-functionalities across programs with laser-like focus.

The company has slung together a group of programs that competes with Oracle (Nasdaq: ORCL  ) in accounting and human resources management, Cisco (Nasdaq: CSCO  ) in communications, Google in email with Microsoft's new online Exchange Server, and (NYSE: CRM  ) in customer relationship software. All these applications, along with the Office Suite, interact together. It's one big, bold vision of Microsoft providing a complete solution for enterprise applications.

Final thoughts
Microsoft will tell you the "breadth of programs provides opportunity." Tie collaboration and messaging tools into Outlook. Then have Outlook interact with Sharepoint, and have any of these programs interact with Microsoft's Dynamics suite of HR and customer-relationship software.

Microsoft's business unit is being pitched as future roadkill by some, but I think the cross-sale opportunity on the applications surrounding Office is misunderstood. Given better tie-ins and having partners sell their product line as a fully packaged solution, the company has some great opportunities to expand its revenue away from the Office suite. Really, it's just following the path of its large IT peers. Microsoft is trying to become a one-stop shop for clients' needs.

Do you still think Microsoft's Office suite is doomed and the surrounding applications will wither away as well? Or do you think the company has a bright future? Sound off in the comments area below.

Eric Bleeker doesn't own shares of companies listed above. Microsoft is a Motley Fool Inside Value selection. and Google are Motley Fool Rule Breakers picks. Apple is a Motley Fool Stock Advisor recommendation. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of Google and Oracle. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.

Read/Post Comments (4) | Recommend This Article (12)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 14, 2010, at 1:51 PM, Henry3Dogg wrote:

    Microsoft has been intellectually bankrupt for a decade.

  • Report this Comment On July 14, 2010, at 2:59 PM, grewjac wrote:

    MicroSoft is hamstrung by the notion they have to do users' thinking for them. I started a short-term project with a consultancy who provided a laptop with Office 2007 installed. I am quite proficient with earlier versions of Word and Excel, but it has taken two weeks of a six-week project to figure out how to format text and spreadsheets, because the drop-down menus are gone, with incoherently-arranged icons which these geniuses assumed would be more intuitive for new users. The problem is the MILLIONS of existing users whose productivity goes down the toilet whilst trying to write even simple, but suitably formatted professional documentation. WHAT were they thinking? Obviously, it didn't involve user outrage over having to re-learn how to do their jobs with horridly re-designed software. If they wanted to make the new user experience less difficult, provide tutorials. Don't screw with the more vast population of productive users.

  • Report this Comment On July 15, 2010, at 11:49 AM, jpanspac wrote:

    grewjac, I agree with you completely.

  • Report this Comment On January 05, 2011, at 1:30 AM, Johnexo wrote:

    Although not exactly a compatibility issue, many users find Office 2007's new user interface incompatible with their way of doing things. The Ribbon replaces the old-style menus, and while this new tabbed Ribbon seems to be easier to learn for new users (who haven’t used previous versions of Office), many longtime Office users have complained that they miss the old menus.

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