On Tuesday, July 17th, Microsoft Corporation (MSFT) CEO Steve Ballmer announced a new version of its Office software. The new version is being developed to embrace cloud computing and has been designed to fully integrate with all types of mobile devices. While the new Office software will work on most versions of the company's Windows operating system, Ballmer said that the new Office will "fully light up" when run on Microsoft's forthcoming Windows 8. The company announced last week that it expects to release Windows 8 toward the end of October.
Ballmer's announcement focused on the many features new to Office that will, the company claims, make the software the best choice for work productivity in the cloud and mobile environments. Ballmer outlined the top new features of Office:
The new Office will not be run solely on a user's computer, but will access and run from Microsoft's remote servers. From these servers, users can save, publish, and share their work with other users as well as their desktop computers and mobile devices.
Office will now respond to traditional keyboards, a mouse, and touch screen methods, including those that the company is expected to introduce in Windows 8.
Devices running Office will now use as their default storage drive Microsoft's new "SkyDrive" cloud storage service. SkyDrive will enable users to use, save, and share documents across various platforms, including mobile phones and tablets which run on competing operating systems.
The new Office will be fully integrated with Skype video calling and will enable the Office user to sign in and restrict access to documents through the use of visual passwords.
Office will now offer the applications OneNote and Lync when Windows 8 is introduced later in the year. OneNote is an application for taking personal notes when on the go. Lync is a unified communications application which allows users to coordinate and integrate audio, video, web conferencing, instant messaging, and telephone applications into a consistent Office-compatible interface.
Microsoft will also update Office for Mac 2011 later this year so that Apple users can have access to all the features of the new software available to them.
Microsoft has designed the new Office to easily run on its newly introduced tablet computer Microsoft Surface. Microsoft worked closely with Arm Holdings, PLC (ARMH) in the design of special low-power chips to run Surface that would not compromise the performance of Office. In additional preparation for the introduction of the new Office and Windows 8, Microsoft purchased the enterprise-based social network Yammer for US$1.2 billion just three weeks ago. Through Windows 8, Yammer will be fully integrated into Office.
Microsoft appears to be making a strong commitment to cloud computing in other areas of its operations as well. In late June, Microsoft signed an agreement with Avanquest Software, S.A. (EN Paris: AVQ), a French software company, to help it develop cloud-based software for computer gaming. The agreement is expected to help Microsoft to also expand its presence in the consumer real-time, live gaming market.
The company is also demonstrating through the new Windows 8 and Microsoft Surface, that it is willing to move away from traditional mouse and keyboard entry and make a commitment to touch entry. Reportedly, Microsoft is working with hardware partners Dell, Inc. (DELL) and Hewlett-Packard Company (HPQ) to make the touch entry experience on computers with Office or Windows 8 software even better.
This announcement comes at a time when Microsoft is enjoying strong revenue growth in its Business Division, which is responsible for the development and marketing of Office. In the third quarter of this fiscal year, Microsoft reported that revenue from the Business Division grew by 9.1% to US$5.8 billion, largely due to the strength of sales of its Office software. The company - which is expected to release recently closed fourth quarter earnings on July 19th - is expecting the new version of Office to significantly expand this growth further, as it believes the demand for functional business applications in cloud computing and integrated mobile devices will continue to experience strong growth.
Microsoft shares closed today at US$29.66, up US$0.22 over closing yesterday. The stock has increased in value by 13% since the start of 2012.
I believe that the outlook for Microsoft's stock looks very strong for the second half of 2012 and probably well into 2013. The company has a great base to build on - Office being the leading business productivity package in the world today - and it has demonstrated a commitment to cloud computing and now, at last, is making its products fully integrated into today's very mobile environment. Microsoft will be expanding Office into 11 additional languages and 46 new markets later this year. Since the company's Business Division is one of its most lucrative - and Office is the leading product for the Business Division - I am confident that Microsoft stock will continue to perform very well.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
