The Next Office: What's It Going to Take?

Jeff Raikes has a dilemma. As the man in charge of Microsoft Office (his official title is group vice president of productivity and business services), Raikes has publicly announced his intention to double revenues from the office productivity suite. And Office is a cash cow, generating $1.88 billion in Microsoft's last fiscal year, which is more than 40 percent of the company's income. The problem, however, is that by mid-2002, Office sales slowed dramatically, to about 1 percent of the company's income.

The problems are obvious. Office releases are lackluster, with few important new features or improvements that warrant the upgrade. Office is also expensive—often two to four times the cost of Windows, causing corporations to postpone upgrades. And Office is entrenched. With few viable competitors in the office suite space, Microsoft has little incentive to offer bold new ways of working with data. From Raikes's perspective, that last point means that the biggest Office competitors are earlier versions of the suite already installed on millions of PCs worldwide.

Raikes's solution to this problem is Office 11, a new version of Office that will ship in mid-2003. Office 11 offers several improvements—some dramatic, most not. The suite will offer at least two new applications, including the XDocs application I discussed in my October 15 commentary "More from MEC: Titanium, Greenwich, Jupiter, and XDocs", and OneNote, which Microsoft Chairman and Chief Software Architect Bill Gates announced during the keynote address Sunday night at COMDEX Fall 2002.

OneNote is an interesting solution for creating, storing, and managing notes, whether the notes are created with a standard keyboard, such as on a desktop or notebook machine; whether the notes are handwritten notes, pictures, or diagrams created on a Tablet PC; or whether the notes are voice recordings. Information workers take notes constantly, but they don't have a central location for note creation, storage, and management. Previous Office versions offer the weak Notes component in Outlook, but few people use the feature. With OneNote, users will have access to standard Office tools to take notes and meld them into the beginnings of a formal document, which is often why people take notes in the first place. I'll have more to say about OneNote after I spend some time with the software, but the tool looks interesting and innovative, and for Tablet PC users especially it's shaping up to be a must-have tool.

Office 11 is also taking an interesting approach to interoperability by offering well-formed XML as an alternative to the native Microsoft Word, Excel, and PowerPoint formats. I need to examine this feature more closely, but according to Microsoft, XML will open new possibilities for security and interactivity. The XML compatibility is interesting because it represents Microsoft's admission that not all data is stored in the company's proprietary formats. Because the key Office 11 applications will be able to "speak" XML, they'll be able to work more seamlessly with outside data, forgoing expensive and timely conversion processes.

Some of Office 11's biggest improvements, however, involve collaboration and messaging, and, to that end, Microsoft has upgraded Outlook more substantially than any of its other applications. Outlook 11 now sports a three-column view by default, which displays the content of email messages in a wide right pane that can often display an entire email message, eliminating the need to scroll. Office 11 provides a quick-access Button Bar for tasks such as Contacts and Calendar and new email folder arrangements that let you bring your most important messages to the top. If you spend a lot of time with email and personal information management, Outlook 11 will be worth examining.

In a somewhat controversial move, Microsoft developed Office 11 to run only on Windows 2000, and later OS versions. Microsoft says that this action is to increase security and decrease development time, and logically, it's hard to understand why anyone running an OS such as Windows 98 would need to have the latest and greatest Office suite. But the growing complaints from the user community about forced upgrades might make Microsoft reverse course. But for now, you need to factor in this situation if you're considering the next Office upgrade.

So what will it take for you to roll out the next Office version, and do any of the enhancements listed here qualify as must-have features? I'm interested in knowing whether you use Office and how you use it. If you don't, then what do you use and why? Is Office doomed to future irrelevancy, or will Raikes's cash cow keep producing?

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