Will Microsoft Lose the "Office" Market?

Includes: IBM, JAVA, MSFT
by: David Jackson

Excerpt from our One Page Annotated Wall Street Journal Summary (which you can get emailed to you every morning by signing up here):

Microsoft Relents to Pressure On OpenDocument Format

  • Summary: Microsoft announced that under pressure from governments it will offer today a software download on its web site that will allow users of Word, Excel and PowerPoint to read and save documents in the OpenDocument format. Microsoft had been advocating its own document standard called OpenXML, but met resistance by rivals arguing that government archives shouldn't be entrusted to a standard controlled by a single company.
  • Comment on related stocks/ETFs: This will be taken as a negative for Microsoft (NASDAQ:MSFT), as greater adoption of a non-Microsoft standard will imperil Microsoft's lock on the office productivity software market. With most users finding Office's bloated features unnecessary, the main barrier to switching to an open source alternative is document compatibility. This will therefore be read as incrementally positive for Sun Microsystems (NASDAQ:SUNW), promotor of the main open source rival of Office, OpenOffice, and to a lesser degree IBM (NYSE:IBM). However, be careful here; the devil is in the details. Microsoft can impede Office's ability to read and save OpenDocument documents in numerous small but impactful ways, starting with offering the software as a voluntary download rather than an automatic update. The article's statement that "Microsoft plans to release a tested and more polished version of the software late this year for Word and early next year for Excel and PowerPoint" also suggests that the current version may be problematic. Bottom line: too early to predict the demise of Office.