Microsoft yields to ODF, ushering in new era of competition

Stan Beer
Monday, 10 July 2006 09:43

Opinion and Analysis

Microsoft’s announcement that it will support the development of an Open Document Format (ODF) converter plug-in will bring much needed competition and innovation in office productivity software, according to an office tools analyst. However, Microsoft, which has been effectively dragged kicking and screaming to its position will be the loser in the longer run.

A research note from IBRS, believes that Microsoft's less than full-hearted support for ODF, while not ideal, could have the impact of commoditising and thus reducing the cost of office productivity software. The note predicts that Microsoft's reluctant acceptance of ODF will shorten the time frame of broad acceptance of the standard to as little as three years.

If the research note is correct, then Microsoft's days of reaping fabulous profits from Office, which constitute about half the company's net earnings, are fast coming to an end. The signs are already there that this is happening, with growth of Office sales slowing to almost a dead stop.

While Microsoft would scarcely admit it, the company has already tacitly acknowledged that its legacy technologies, such as Office and perhaps even Windows itself, are showing signs of being on the wane. That's why the company is spending up big to find new markets to enter.

Meanwhile, other companies which were one time allies of Microsoft, such as Adobe and Symantec, have sensed a weakness in the one-time unassailable market leader and have gone in for the kill. Adobe has prevented Microsoft from including a save to PDF function in Office 2007 and Symantec has launched a law suit and is trying to delay Vista coming to market.

Whether Microsoft can respond to the challenges it faces and carve out a space in new markets remains to be seen. However, it looks like its one time domination of the office productivity space is coming to an end.