InformationWeek is reporting that Microsoft wants many other applications on all sorts of platforms to look like the forthcoming Office 2007 product suite.
Microsoft on Tuesday announced a royalty-free licensing program so that outside developers can apply the Office 2007 interface to their own applications.
There’s a catch, though:
Microsoft will deny a license only to developers who plan to craft direct competitors to the Office 2007 core applications of Word, Excel, PowerPoint, Outlook, and Access. “Microsoft spent hundreds of millions of dollars on the research, design, and development of the new Office user interface,” said Harris, “but we want to preserve the innovation for Microsoft’s productivity applications that are already using the new UI.”
A couple of points on this:
- OpenOffice.org is excluded from this, so Microsoft is being explicit about yet one more saber it is holding over the heads of open source developers, as well as competitors. While ODF is designed to increase competition and innovation by many people, thereby delivering greater value and cost efficiency to customers, Microsoft seems to be doing everything they can to be the only game in town. That’s business, I suppose, but you get a choice regarding what you want to do about that.
- If they spent hundreds of millions of dollars on the R&D for the UI, their development costs are seriously out of whack, in my opinion. It may look good, but no way should it have cost that much I understand that there may be, shall we say, alternative software development methods that might be more cost effective. In any case, this size of expenditure is further evidence of why I think the office suite market will collapse within the next decade.
This makes good business sense for Microsoft: use the UI to suck more applications into the Office look-and-feel ecosystem, so that customers will feel good about the environment in which they are working. It’s somewhat similar to the “Office as center of the document format universe” play they are running with their massive 6000 page “Open XML” specification.
The stakes are really high here for Microsoft. For 2006, Microsoft’s revenue was $44.282B with an operating income of $16.472B. Their “information worker” line of business had revenue of $11.756B and operating income of $8.285B. This is the category that includes Office:
Information Worker includes Microsoft Office, Microsoft Project, Microsoft Visio, SharePoint Portal Server CAL, and other information worker products including Office Communications Server and OneNote.
Doing the math, this “information worker” segment of the business generated about 26% of the revenue but about 50% of the operating income for Microsoft. It doesn’t take an economics genius to see the sensitivity of continued sales of Office to Microsoft’s overall operating income. Again, this is business, but look at what they are doing and not doing with respect to ODF, OOXML, and now the UI through this financial lens if you want to really understand what is going on.
Their 2006 annual report lays out the perceived risk factors for open source.
Addendum: Tim Bray pointed out these same kinds of numbers in his blog entry “Office Politics and Profits” on November 30, 2005.