Biz & IT —

Microsoft Office lifestyle: making consumers more like enterprisers

Steve Ballmer lives in Office '13, Windows 8. He wants you to be his neighbor.

Microsoft CEO Steve Ballmer says his "entire life is on Office 13 and Windows 8."  He wants you to live there, too.
Microsoft CEO Steve Ballmer says his "entire life is on Office 13 and Windows 8." He wants you to live there, too.
Sean Gallagher

At the Office 2013 event in San Francisco on July 16, Microsoft CEO Steve Ballmer tried to make the case that Office isn't just about work—it's a lifestyle brand. Saying, "My entire life is on Office 15 and Windows 8," Ballmer played up the consumer-focused nature of Office, and its place in Microsoft's effort to make work more like personal time and personal time more...like work.

As we've looked at Office closely over the past few weeks, the paradox of Microsoft's Office 2013 pitch to consumers has just gotten more and more puzzling. Yes, Office has been historically marketed to consumers. But as Microsoft prepares to launch Office 2013, the Surface, and Windows 8, it is clear that Ballmer and his executive team are trying to make Microsoft even more of a consumer-focused company. In some ways, Microsoft is trying to follow Apple's lead down the path toward being a "lifestyle" company—but with a distinct twist.

The Office "lifestyle" is for workaholics.

Most of the time, when some industry analyst or journalist throws out the phrase “consumerization of IT,” they’re talking about people bringing their technological personal lives to work with them—the explosion of demand for support of consumer devices and a more “app-like” way to access enterprise data.  Microsoft is trying to take things the other way by moving enterprise technologies downstream into consumer’s daily lives.  Office is still as complex and feature-dense as ever, but it's more “engaging” to users through means like providing a way to add “apps” within Office much like one would add apps to a smartphone. Microsoft is trying to put a more consumer-friendly face on something that is really built with corporate customers in mind.

Ballmer made a passing nod to “supporting the enterprise" and Microsoft Office Corporate Vice President P.J. Hough held a breakout session later on Monday that went through the purely enterprise-friendly features of Office 2013 (and its associated services and servers). But the main event was focused on the consumer side—home users, students, and hyper-small businesses.  Ballmer said a third of Office's users are students (or at least users of the education-priced version of Office), and that Office is Microsoft's biggest-selling consumer application software product.

The "consumers" that Ballmer introduced from the stage—people who participated in Microsoft's "Real Life Stories" program and were given early access to the code— were not your average consumers. They included: a PTA treasurer and Ballmer-certified "super mom" who retrieved her special Tooth Fairy note to put under a child's pillow from the road via OneNote, an entrepreneurial college student who runs a Web development business on the side, and a band manager who tours with his clients and runs his business from the road. They and the others that Microsoft made available to mingle with press at the event were enthusiastic followers of the One Microsoft Way because they ran every aspect of their life like a business.

For these people, a subscription to Office and Office 365-based services may make a lot of sense. But there are reasons to be skeptical about Microsoft's chances of converting the consumer installed base over to a subscription-based offering, despite any of the touted benefits of subscription (Skype minutes, more storage, frequent background software updates) that Microsoft is using to sweeten the deal.

What will it take to get you into this Office?

Outside of constant streaming updates of Office 2013, a lot of what Microsoft plans to offer through the subscription service can largely be found for free through Microsoft’s Live and SkyDrive services (not to mention Google’s Gmail, Docs, and Drive) while using a previous version of Office. That's a large part of the problem. Deeper cloud integration—to the point of having user interface and spell-check preferences follow the user—isn’t something that most consumers care about, but business and institutional customers do.

There are examples of successful paid cloud services for consumers out there, and Microsoft owns two of them: Skype and Xbox Live. Both are profitable businesses (some estimates put Xbox Live revenue at over $1.2 billion annually) with a large base of users (Xbox Live has over 40 million users, Skype has over 31 million). But there's a significant difference between these services and the Office subscription plan. Xbox Live and Skype are true consumer services because something is consumed: entertainment and communications.

When you play a game online in multiplayer, or view a movie or other video content, you’re consuming something ephemeral.  Office, on the other hand, no matter how it’s dressed up, is not a consumption-oriented product—it’s a creation-oriented tool. Tools are a capital investment. And while people may certainly rent or lease tools they use only once or twice on a project, they certainly don’t subscribe to them.

Sure, enterprises may do subscription-based software because it changes software from a capital investment to an operating expense for accounting purposes. But individual consumers don’t do that sort of balance sheet with software. That's why people generally would rather own a house than rent one, despite the cost of upkeep and the community association fees. It's why most people buy cars outright rather than lease them (leases make up only 20 percent of new vehicle sales, according to the Bureau of Transportation Statistics’ latest data).

To extend the car metaphor a bit, let’s not forget how many people are driving around late-model versions of Office.  Microsoft did an incredible job of selling consumer versions of Office 2010—with 50 percent more in sales six months after its launch than Office 2007 managed in the same time frame. This made Office 2010 the “fastest selling consumer version of Office in history,” according to Microsoft at the time. And many of the people who bought Office 2010 got it at a discount. Users could purchase it as a license key only to upgrade the version pre-installed on their new PC, or as a free upgrade for the copy of Office 2007 they had recently purchased.

With a subscription plan, there’s less of an opportunity to drive adoption. Every Windows RT system will come with a version of Office installed, but it will be a perpetual, hard-wired license, not a subscription. And since the new features of Office 2013 are so closely tied to Windows 8, consumer subscriptions will depend heavily on how many consumers upgrade existing PCs to Windows 8 and decide they want to try the new Office out (assuming new PC purchasers will probably opt for the perpetual license to go with their brand new hardware).

Of course, just like Xbox Live, an "Office Live" in theory would do a lot to smooth out the rough edges of Microsoft's cyclical revenue streams, and help move the company more toward the vision of utility computing that Sun founder Scott McNealy preached for much of the last decade. But to get consumers to buy into that model, Microsoft will face a huge user re-education problem—one that will probably require an aggressive price point for the Office service as well.

In other words, if Steve Ballmer wants consumers to be his neighbors in the Windows 8 / Office 365 world, he may have to front them some rent and prove to them that it's the kind of place they want to live—and not really an office park in disguise.

Listing image by Sean Gallagher

Channel Ars Technica