Microsoft Q&A: Why is Office Online Taking So Long?

mix. That's why I made the comment on stage today that you're seeing these so-called 'cloud only' vendors taking steps to bring the technology down onto client machines. They recognize the same thing.

CIO: But doesn't this just mean that Microsoft, who has made the bulk of it's money from on-premise software, just doesn't want to fully change over? Won't hosted software cannibalize some of your core business?

Elop: Broadly, we look at this as an expansive opportunity, an opportunity to work for our customers. Microsoft Online services is a good example. While the cost for running e-mail and collaboration is lower in total to our customers, Microsoft's participation in the money that's spent there actually goes up. Not only are we "selling software"; we're also delivering a service. So that's market expanding for us. Another example is with our client software. Roughly estimated, there are about a half billion people who use Microsoft Office. About half of them have paid for it. So there's a big group of people out there who are pirating software or looking at various alternatives. They can use some of our technology in a browser and supported by ads as an example. That means they come into the family and contribute to the overall revenue base. There will be, at the margin, some cannibalization -- people who pay one way today choose to pay a different way tomorrow -- but I think broadly speaking we see it as a market expanding opportunity.

There's no hesitation. No one is going to write a story that Microsoft is hedging their bets. No, no, no. This is full on. We're embracing this. I believe all great companies, when those moments come of the next generation, have to make the really hard decisions and go for it and make that big leap forward. Microsoft went from DOS to Windows, from Windows client to Windows server, from the Internet and now to cloud based computing. It's shown the ability to make those big moves. And generally, the numbers have been going in the right direction as a result of this. So I'm sure years ago, people said the browser will kill Microsoft. Well, Microsoft has done well over the last few years.

CIO: You mention Online Office. It's not going to be available until late 2009. Meanwhile, Google for instance has had a fully Web-based productivity package, Google Apps, since 2007. Why is Microsoft so late here?

Elop: It's to make sure it's in line with what our customers expect. And also, we're held to a certain standard. And so, if one of our competitors issues a press release that says, hey we have "bolding" or "underlinining," that for whatever reason gets a lot of press. I'm not quite sure why, but it does. Great. There's been a PR hype machine going on there. When people say, Office is going to be available in a cloud environment, what customers expect is that the user experience between environments hangs together. The familiarity has to be there. Another thing they absolutely expect is that the fidelity of the documents is maintained. So if you take a Microsoft Word document on your PC, edit it in the cloud, ship it over to your mobile phone, change it on your mobile phone, and send it back to your PC, the expectation is that all aspects of that are perfectly preserved.

Right now, with competitor products, if you move documents into and out of their environments, it's like a meat grinder -- you don't recognize what comes out on the other side. We're held to a different standard. So both from the guidance we've received from our customers, and for what really is going to set the standard for this environment, we think this timing is an appropriate one.

(Image: Microsoft)