Why Microsoft's Elop isn't afraid of Google

The Business Division president discusses Office 2010, hosted apps and the link between them

IDGNS: Here's how I see the challenges for Office 2010. On the business side of things, you've talked about the "good enough problem," in which people think what they have is good enough. This is especially true now when people have cut back on IT spending. How would you address these challenges?

Elop: One of the interesting things, with every release of software we've ever issued, we've faced the "good enough" problem. Forget about the competitors -- we always have the previous version of software. So our whole process, our whole plan for the interaction we do with customers is ensuring the value is there in the times in which we exist to encourage customers to say, what I have is the best that was available before, there's now something else.

You could say, "Oh, maybe what was good enough before is still good enough." But all of a sudden they see, for example, opportunities to save money or to solve a business problem that hasn't been solved before. And of course that's what we're focused on, the capabilities we've introduced in 2010.

One example of this does relate to software plus services. One of the big things around Office 2010 is it's the release that really plays off the cloud-based experience. It's very well-demonstrated already to enterprises that take advantage of the cloud and have some real advantages to it, technically and from a cost-management perspective.

So when they say, "Oh wouldn't it be great if I could use the cloud with this particular activity. If I could take Exchange into the cloud with our exchange online product, or SharePoint online." We've done all sorts of work in Office 2010 to better enable that type of activities.

IDGNS: I see the cloud-based products and Office 2010 as separate. Where is the intersection?

Elop: While people tend to think about different products as standing on their own, and each one of them does, our real focus is having them all work better together, interoperating in a way that one reinforces the other where the whole is greater than the sum of the parts.

So when you're using Office 2010, the ability to work within Word 2010 and say, "Hey, am I storing that document locally or am I putting it up into a cloud-based environment of SharePoint or am I posting it to the Web?" All of those types of things are brought together in a way that makes sense to the user and allows the company to take advantage of some of those products. So we're very deliberate about creating an environment where we can move these things forward.

IDGNS: With Office 2010 as far as the consumers go, there are some that believe Google Apps and others are a challenge on that side of the market. Do you worry about that?

Elop: We think about it very differently. It's the combination of the applications in the browser environment focusing them there. But we also recognize and believe that people will think, "Hey, the browser is great for this and that activity, but I want that rich client application for something else I'm doing."

That is the case today if you go talk to a whole bunch of those users of competitive products in the browser and find out if they're using Office for other things they still need to get done.

The thing to really recognize is that some people look at a Google or whatever and say, "Oh, man, they're got free applications and they've got some number of people using them." We have way, way, way, way more people using free versions of Word, Excel, PowerPoint, Outlook, what have you -- way more than Google has or will in a long time using the Google Docs applications.

Of the 500 million copies of Office in use today, half of those have been paid for. The other half have been free. Obviously, I'm tipping a hat to people who might "borrow" software.

Those 250 million people who are familiar with the Office experience, as we introduce them to the Web applications, instead of downloading something from BitTorrent or whatever, they're going to come to our Web site and make use of those applications.

And some percentage of them might see an ad along the way and say, "Hey, I'm really impressed with the latest functionality -- instead of the old version I sort of downloaded and didn't pay for, I'm going to pay."

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Elizabeth Montalbano

IDG News Service
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