NPR logo Five Reasons Microsoft Office 365 Should Be Taken Seriously


Five Reasons Microsoft Office 365 Should Be Taken Seriously

Microsoft CEO Steve Ballmer launches Microsoft Office 365, the new cloud based service June 28, 2011 in New York City. Getty Images hide caption

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Getty Images

Microsoft CEO Steve Ballmer launches Microsoft Office 365, the new cloud based service June 28, 2011 in New York City.

Getty Images

Kicking sand at Microsoft is such a longstanding tradition that it's hardly worth mentioning. Still, the sand has been stirred again by today's rollout of Office 365, a cloud-based suite of business apps. The product takes square aim at Google Apps, and Google already has applied its boots to the beach.

"You can't just take legacy, desktop software, move some of it to a data center and call it 'cloud.' Apps was born for the Web and we've been serving hundreds of millions of users for years." Shan Sinha, the product manager for Google Apps, writes in a Monday blog post.

In this era of portable devices, where Microsoft has struggled to get a foothold, there's a temptation to start drafting the obituary for Office 365 before the product even gets a chance to live.

But that's dumb — really, really dumb. Here are five reasons why:

1. Microsoft still rules the desktop space. Like it or not, for years to come, most people are going to be working at some variation of your basic personal computer. NetMarketShare, which uses captured data to try to measure usage habits, estimates that the various flavors of Windows still run on nearly 89 percent of all personal computers. That number is drifting downward slowly, as Mac, iOS and even Java take a bigger bite of the market, but it's still, oh, 16 times the size of its nearest competitor.

Google likes to note that Apps is designed to run on any platform. If you're a PC user — and you probably are, based on the data — you don't care about 'any platform' — you care about your platform. Office 365 is designed to look like the apps you're already using at work.

2. Microsoft has proven again and again that it doesn't need to be first to market. Remember how Apple beat Microsoft in the race to make a graphical user interface (or, heck, how Xerox beat them both)? Well, perhaps not. But you can see how that turned out. Netscape certainly scooped Internet Explorer; Lotus beat Excel; numerous good programs beat Outlook; Nintendo and others beat Xbox; and on and on and on.

Of course, it doesn't always work out for Microsoft — Google continues to dominate Bing and iPods eclipsed Zunes, for example. But that brings up the next point:

3. Microsoft (usually) doesn't give up, even when it gets it wrong. Nothing seems to bring up the old sense of schadenfreude in critics like the chance to roast Microsoft over a new product. It wasn't that long ago that Windows Vista was the target of widespread criticism, and that was far from the first time critics thought a new Microsoft product was bad-to-awful. Remember Microsoft Bob (shudder)? Do you still get irrationally furious if Clippy shows up somewhere, somehow? Heck, back in the 1980s, people were fuming about versions of MS-DOS.

But in most cases, Microsoft hears what is being said and comes out with something superior. Vista begat Windows 7; Bob and Clippy begat the idea that users really aren't that dumb; MS-DOS begat ... well, better versions of MS-DOS. If Microsoft smells a need and a chance to grab market share, it has a record of pounding forward until it gets things right.

4. Microsoft is in far better shape than some people think. Ever since Apple passed it in market capitalization, you can't help but sense that Microsoft is Old And Busted and Apple is the New Hotness. But Microsoft had a gross profit of nearly $53 billion in 2010, compared to Apple's $26.71 billion. Microsoft had more than $7 billion in cash on hand at the end of 1Q 2011. Does that sound old and busted to you?

5. An angry Microsoft is a motivated Microsoft. See No. 3. Also, have you ever noted how Microsoft seems to ultimately fail only in the areas that don't get much public attention? Once Microsoft turns its full Sauron-like glance to a product, it has a pretty good track record. If the eye turns away ... not so much.

So: ignore Office 365 at your peril. Google might feel confident today that it can own this segment of the computing world, but based on Microsoft's track record, that confidence may be considerably misplaced.