Microsoft sees strong Office growth potential

Microsoft said on Wednesday the growth opportunity for its Office software division is better than it was seven years ago, because the company is positioned to expand into new business areas.
The traditional Office segments of spreadsheets and word processing may be slower-growing, but new businesses like Internet-based corporate phone systems and data-crunching applications offer new opportunities, said Jeff Raikes, president of Microsoft’s business division.
Speaking at the Reuters Global Technology, Media and Telecoms Summit, Raikes said Microsoft is expanding into a broader segment of business desktop software, or what Microsoft calls information work.
Raikes, who heads up Microsoft’s biggest unit, accounting for nearly a third of revenue, said its growth opportunities are “absolutely” better now than when he took over the business in 2000.
“What you’ve seen is a focus on our part to expand into a broader portion of information work,” said Raikes in a video conference with reporters.
When asked if those potential opportunities would boost the division’s growth rate over the next few years, Raikes said it would boost growth in absolute terms but comparing to historical levels would be difficult since the $14 billion division is much bigger now.
Microsoft’s Windows division and its Office unit account for more than half of its sales and nearly all of its profit.
Increasingly, Microsoft is using Office as a platform to build upon for other applications. The company’s Dynamics line of business software and its upcoming business intelligence products incorporate Office applications.
Tapping into people’s familiarity with Excel spreadsheets, Outlook e-mail or Word documents, Microsoft aims to use Office as a front door into many new businesses.
In its push to deliver office phone calls over the Web on the PC, Microsoft aims to simplify how workers communicate with one another by integrating phone calls with its Office Outlook e-mail system and corporate instant messaging programs.
Microsoft released the new version of Office 2007 earlier this year. The company introduced the new Office at a time when rivals, including Google, are offering word processing and spreadsheets online for free.
Raikes said it has seen almost no business impact from those services in terms of customer adoption for Office 2007.
“My impression is that this will be one of the fastest adoption rates of any new release of Office,” said Raikes.
Microsoft’s Office Live web service, which now offers small businesses hosted e-mail and Web sites and collaboration software for free, or for a monthly fee depending on the level of service required, will be a platform upon which it can add more services, Raikes said.
“You’re going to see us expand the capabilities of what we provide in the services area,” said Raikes, speaking about Office Live. He did not elaborate on what services it may add in the future.
Raikes also said it can still expand sales in the traditional spreadsheets and word processing business by expansion into emerging markets and the reduction of piracy rates.