Emergic: Rajesh Jain's Blog

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Market Break in Office Suite

June 7th, 2002 · No Comments

There is an excellent analysis of the action in the Office Suites segment by Amy Wohl (the newsletter issue isn’t up yet, but should be soon; I got mine via email). Amy’s perspective is of course the developing countries like the US. It becomes even more pronounced when we consider low-income countries.

Writes Amy: “A market break occurs (you can usually only see them after the fact, not before or during) when some event changes what mainstream customers will choose to buy. For example, The announcement by IBM of its Personal Computer in 1981 was such a break. Before, users generally did with little or no individual access to computing (which was largely terminal based). After, computing started on the road to becoming highly personal. By the early 90’s, more than 80% of U.S. office workers sat in front of a PC, changing office work and office workers forever (and making Microsoft one of the most important companies in the world in the process).”

Amy summarises the reasons why Microsoft may face a “market break”:
– Microsoft’s decision to shift to Annual Revenues and corporates not keen on upgrades and the annual fees
– Economy has impacted IT budgets and spending has slowed
– Govt and some corporates are playing the Linux / Open Source Card

Just such a market break may impact Microsoft in the Office Suite segment, with competition coming from OpenOffice (free) and Sun’s Star Office (USD 75 or less).

One point Amy makes is that “the real cost of equipping office workers with
computing function is not software (or hardware), but rather human costs, especially support.” In emerging markets like India, it is the other way around. The hardware and software costs are prohibitive, and support costs are much lower.

Not only does OpenOffice make excellent sense in these markets, it is also important to bring down the total cost of computer ownership. This is where there is a great opportunity to rethink the enterprise IT infrastructure for the next 500 million people. The innovative ideas aren’t going to come easily from the US companies, since they are selling in a market where there already is a computer equipped with all the software needed on all the desktops.

For example, think of a Thin Client, Linux desktop which is (a) low-cost: no more than USD 15 per person per month for hardware, software and support (b) works out-of-the-box, with everything pre-installed and running off the (thick) server (c) is completely compatible with the Windows world, so one can send/receive mails/files to Windows users, share files with them on the LAN, and even migrate from Windows (d) trivially easy to manage for the administrator “over the wire”, because the client has nothing really to worry to about (if the hardware goes bad, junk it and just use another Thin Client — since all the data and preferences is server, the user sees no difference and little down-time) (e) has a limited but complete (for most users) set of applications, including a graphical desktop, Mail, Browser, Office applications, Calendaring and Instant Messenger, and (f) needs little training for even novice users.

This is today in the realms of possibility. It has been in recent times. What is needed is to put it all together in a bundle. Users dont need to be setting up anything, they just need to use it. This is what can disrupt the IT value chain in the coming years.

Tags: Microsoft

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