Microsoft’s Bill Gates discusses the new version of Windows Office Suite with CNBC’s Ron Insana Tuesday.
The Associated Press
updated 10/21/2003 12:40:52 PM ET 2003-10-21T16:40:52

Microsoft Corp. launched a new version of its Office software on Tuesday, betting its spam-fighting capabilities and enhanced tools for users will recharge growth for its second largest cash cow.

WITH SIX DIFFERENT ITERATIONS, 11 different products, four servers and other services, the world’s largest software maker has taken to calling the massive group of programs the Microsoft Office System 2003 to underscore the software’s ability to work together. (MSNBC is a Microsoft-NBC joint venture.)

Now in its 11th version since launching more than a decade, ago, Office has evolved into a tool that lets business workers to collaborate on documents, research information from applications and manage data over the Web, Microsoft Chairman Bill Gates said at a launch event in New York.

“There’s no doubt that first version was a little clunky, a little bit too much of a technologist’s dream .... But we listened hard. People asked us to change it and we drove it forward,” Gates told an audience of analysts, journalists and business partners at the event.

Word for writing documents, Excel for spreadsheet calculations, PowerPoint for presentations, and Outlook for e-mail and calendar management still make up the core applications in the new Office, which will retail at between $150 and $500 per copy.

Microsoft is spending $500 million to sell Office 2003 to individuals and businesses, of which $150 million will be used to advertise Office aggressively in print, radio and television.

PREVIOUS VERSIONS TOP COMPETITOR

“Teams of people are where I think the (new Office) really shines,” Chief Executive Steve Ballmer told corporate and government technology buyers at a Gartner conference in Orlando, Florida.

The challenge for Microsoft and the companies that sell its software will be to convince users to upgrade from previous versions, which generate $9 billion in annual revenue, nearly a third of Microsoft’s total.

“The previous versions of Office are our number one competitor,” Jeff Raikes, head the Microsoft division that includes Office, said in an interview before the announcement.

Also included in the new version is support for XML, or Extensible Markup Language, a method for converting computer documents into publishable Web pages that are structured to be shared across computers, networks and other software programs.

Office’s XML capabilities would allow companies to collect data from Excel spreadsheets and through custom-made forms on a new Office product called InfoPath.

Ted Schadler, an analyst with Forrester Research Inc., said Office 2003’s ability to feed data into corporate systems, as well as its ability to let multiple users communicate and work on business documents together, will convince customers to upgrade.

“With Office System, Microsoft can tap into other corporate budgets earmarked to harness information and make workers more productive,” Schadler wrote in a report issued on Tuesday.

At the same time, other analysts have noted that such complexity, developed by more than 2,000 software engineers, might make companies reluctant to upgrade until the new version is tested for security and reliability.

Moreover, Office’s days could be numbered, since Microsoft is planning to shift to a new version of its Windows operating system in two to three years, which could require another overhaul of Office.

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