Hosting News
Microsoft to Offer Office Online to Fight Google Apps
2008-04-27
Seeing the success of the Google Docs, Microsoft is looking to take a slice
of that pie and provide it’s own office online.
Microsoft plans to conduct a yearlong test of a change to a key part of its
license for Office 2007 that will, according to multiple sources, enable Web
hosting service providers to offer the Office suite via an emerging technology
called application streaming.
The sources said Microsoft will make the announcement early next week during its
Microsoft Management Summit in Las Vegas.
If successful, the company will likely overcome its long-held fears about
hurting its hugely profitable Office business and make the change permanent.
Microsoft "has been sensitive to whether it would cannibalize its own
application business," said Neil Gardner, a vice president of marketing at
application-streaming software vendor Endeavors Technologies. "They were also
sensitive to the piracy side of it, of losing control over distribution."
Such a change could mean that Microsoft, with the huge data centers it is
building, will start to stream Office directly to its customers, too.
It will be the second announcement by Microsoft this month that showcases its
determination to fight growing competition from Google Docs, Yahoo's Zimbra,
Zoho Office, ThinkFree and similar services.
Last week, Microsoft confirmed that it is beta-testing a low-end Office bundle,
code-named Albany, that it will offer on a subscription basis.
Microsoft did not respond to a request for comment.
News of the license change had already leaked out among members of Microsoft's
hosting partner community, which had been campaigning for it for the past
several years.
"What was frustrating for us was that Microsoft allowed Terminal Services for
Office but explicitly disallowed application streaming," said Gardner, whose
company is trumpeting the news on its Web site.
But others warned that Microsoft will have to price streaming Office low enough
to make it competitive with the paid Enterprise version of Google Apps, which
offers technical support for $50 per user per year, and competitive too with the
free offerings.
"Why would a [small business] go out and pay an arm and a leg when they can get
Google Docs or OpenOffice for free?" said Ty Schwab, CEO of Blackhawk Technology
Consulting LLC, a Eugene, Ore., reseller of application streaming software. The
price "has got to be close if Microsoft wants to make itself a force to be
reckoned with."
Office 2007 as a streamed application is more similar technically to Google Apps
than Albany, though all three share a subscription model.
While some of Albany's components, such as the Office Live Workspace file
storage service and the Windows Live OneCare security service, are delivered
through the Web, the core Office 2007 software will still be installed locally
on users' PCs.
By contrast, a streamed version of Office would be stored on a server at a
hosting provider or enterprise but delivered bit by bit to users on demand
through a local network or the Internet, just as streamed music and video are.
The software code will be stored on the local PC and persist even after a user
logs off.
That means that while opening Office for the first time may take 4 minutes or
more, subsequent start-ups should take only 10 to 20 seconds, Gardner said.
It also "preserves the value of desktop apps and the value of the fat desktop
PC, which is very important to Microsoft," said Paul DeGroot, an analyst at
independent firm Directions On Microsoft Inc.
Application streaming is similar to desktop virtualization, also known as
virtual desktop infrastructure (VDI), except that in the latter, an entire
application stack — including the operating system and desktop interface — is
streamed down to the user. That requires more network bandwidth, and more
storage and processing power on the server side.
Application streaming also differs from Terminal Services, a hosted delivery
method that Microsoft has long supported. In Terminal Services, the application
is entirely stored on the server. All data and application code is accessed
through the Internet, in a manner roughly similar to a software-as-a-service
app, except not through a Web browser.
Some types of application streaming delivery technology, such as Endeavors'
Application Jukebox, can also be set to automatically download the necessary
code so that users can run Office completely offline, such as when they are on
an airplane, Gardner said.
Face to face with Redmond reps
Vendors have been preparing for application streaming for the past several
years.
Microsoft has been pushing its its Softgrid application streaming at its
enterprise customers for the past year. VMware bought an application streaming
firm, Thinstall, in January, while Symantec Corp. already owned AppStream via
its Altiris acquisition.
That, along with the Google threat, may have helped convince Microsoft's
information worker unit (which oversees Office) and its worldwide licensing and
pricing group to approve the 12-month pilot of the change to its service
provider licensing agreement, or SPLA.
Starting in June, hosting providers that pass a face-to-face interview with
Microsoft representatives will be able to offer Office Standard and Office
Professional Plus.
Microsoft's partners say they have been itching to offer streaming Office for
years, only to be thwarted by a combination of Microsoft's onerous licensing
terms and its rough treatment of violators, essentially treating them as
software pirates.
But Microsoft's attitude was already softening when a British Web hosting firm
Fasthosts began streaming Office to its customers in February for £4.99 (about
$10 U.S.) a month per user.
Microsoft talked tough — an antipiracy executive told ZDNet U.K. that streaming
"infringes our license regulations" — but then failed to crack down on Fasthosts,
which continues to advertise the service on its Web site.
Is $10 a month — roughly equivalent to a $300 copy of Office depreciated over
three years — cheap enough to pull customers away from Google Apps, which costs
a little more than $4 a month?
Not according to Schwab, who believes Microsoft needs to price streamed Office
so that hosting providers can resell it for no more than $5 a month.
DeGroot agrees.
"Microsoft can't be complacent. They've got to be willing to be aggressive on
price," he said. If it is, "I see the market shifting towards app streaming,
though we're in the very early stages of that."
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