Ballmer Says Microsoft Won't Ship Office 14 This Year

Slow PC sales may have eased demand for a Web-based version of the Word, Excel, and PowerPoint bundle.

Microsoft chief executive Steve Ballmer on Tuesday said the software maker would not release Office 14 this year, which means the company is also unlikely to release a Web-based version of the productivity suite in 2009.

In a meeting with financial analysts in New York, Ballmer said the successor to Office 2007 "will not be this year." While Microsoft had not set a release date, industry speculation built expectations of a 2009 release.

Microsoft has said that a Web-based version of Office would debut with the release of Office 14. People who buy the boxed version of the suite would also get access to its components, such as Word, Excel, and PowerPoint, over the Web.

In addition, Office Web, as the online version is called, would include a service called OneNote, which would allow users to collaborate with others and across multiple devices more efficiently.

Ballmer did not discuss plans for Office Web. No reason was given for waiting on the release of Office 14, but Ballmer did paint a gloomy picture for the second half of Microsoft's fiscal year, which ends in June.

The current recession is expected to impact all of Microsoft's businesses, Ballmer said. Microsoft is heavily dependent on PC sales, which are down as people and companies delay purchases.

In forcing businesses and consumers to tighten their purse strings, the economic downturn has tempered demand for new products, such as major upgrades like Office 14, Forrester Research analyst Sheri McLeish told InformationWeek. In addition, adoption of Office 2007 has been slow, and companies that have recently upgraded are not going to want to do it again anytime soon.

"I don't think there's a lot of pent-up demand for the next Office application," McLeish said.

The same conditions hold true for Office Web. Moving employees to a Web-based version of an application also requires time and money for training and deployment, so Microsoft has time on that front, too. "People are going to be slow in moving to anything," McLeish said.

Nevertheless, Google, which in 2007 launched a host of free and low-cost productivity applications under a brand called Google Apps, is likely to continue chipping away at Microsoft's franchise.

While large companies aren't replacing Office with Google Apps or similar offerings from others like Zoho, they are using the low-cost products to save money. Companies are using the services for temporary employees or for workers that use very limited capabilities in Office, such as only Word to create simple documents, McLeish said.

"The question is, how fast can Google move to take advantage of the slow release of Office Web?" she said.

In the long term, Microsoft believes Office Web will protect its Office cash cow, which along with Windows generates a sizable portion of the company's revenue. Companies are attracted to hosted software offerings because they bring less complexity and easier maintenance than boxed versions. The downside, however, is that hosted applications can't be accessed when Internet access is cut off.

Microsoft's strategy for the Web is to continue to push traditional desktop applications and client operating systems while also releasing complementary hosted products. The company calls the strategy "software plus services."

In other news at the analysts meeting, Ballmer said he would like to talk with new Yahoo chief executive Carol Bartz about a possible Internet search deal. Bartz recently replaced Yahoo co-founder Jerry Yang as CEO. Yang left the post amid shareholder frustration with his failure to reach a merger deal with Microsoft, which had offered $47.5 billion for the portal in early 2008. The bid failed after the two companies were unable to agree on a price.

While Ballmer has said he's no longer interested in taking over Yahoo, he has expressed willingness to enter a search deal to compete with Google, which dominates the search advertising market.

In what other ways is Microsoft changing its stance? InformationWeek has published an in-depth report on overhauling Microsoft. Download the report here (registration required).

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