Microsoft introduces Office Online through ASPs

Software giant Microsoft Corp. is gearing up to enter the application service provider market with Office Online, but Sun Microsystems’ StarPortal might leave Microsoft in the dust, according to one analyst.

Redmond, Calif.-based Microsoft has launched a new method of accessing its near-ubiquitous desktop software. Application service provider (ASP) FutureLink Corp. in Irvine, Calif., announced last month that it is now offering Office 2000 on-line.

The new delivery method could make life easier for small companies that don’t have IT departments of their own, said Microsoft Canada Inc. Office product manager Anne McKeon in Mississauga, Ont.

Office Online will also give end-users the ability to access their files from any computer anywhere in the world, provided that it is connected to the Web and they use their ASP as a data farm. But this freedom comes with a cost.

“Some of the disadvantages of course would be that you couldn’t work in an off-line environment. So if you wanted to just take a laptop and sit outside or be on an airplane, or something like that, you’d need to have that connection,” McKeon said.

This is what distinguishes Palo Alto, Calif.-based Sun Microsystems Inc.’s StarPortal from Microsoft’s offering, said vice-president and research fellow Tom Austin of Garner Group Inc. in Nashua, N.H.

With StarPortal, end users working with Sun’s StarOffice will be able to work off-line. Once they re-connect to the Internet, the files that they’ve edited or worked on will then be synchronized with their existing files.

“It’s StarPortal that really represents Sun’s visionary attempt to go past Microsoft,” Austin said. “If StarPortal takes off, that would make Microsoft a couple of years behind Sun.”

But StarPortal is still a few months away from release and Sun’s vision in reality might not be as bright as it is in theory, Austin warned.

“Historically, Sun has never met a user interface that it couldn’t mangle….They’ve tended not to build stuff that appeals to end users. They do stuff that Unix technicians like. Sun has never understood the importance of fit and finish in end-user products,” Austin said.

He added that Microsoft has another advantage in that it supports Visual Basics for Applications, whereas StarOffice doesn’t.

Office Online is hosted over the Internet on a Windows Terminal Server. All of the processing happens at the server’s end and the only information going over the Internet to the end user is a picture of the screen. This means that the end user can use anything from a Microsoft Windows CE device to a Macintosh to access Office Online, said business development director David Bolink of FutureLink in Calgary.

The ASP-hosted model of Office also gives companies a chance to keep up with software updates since the latest versions will be pushed down to users by their ASP, Bolink said.

But that may not always be a plus, Gartner Group’s Austin said.

“Microsoft has a notion of just streaming out application upgrades at will. That’s a very nice notion under some conditions for some people, but the larger and the more sophisticated the user is, the more the user is doing with the technology, the less likely the user is going to be able to take advantage of that feature,” he said.

Still, Office Online is an easy way for small- to mid-sized companies to reduce their up-front capital outlay, Austin said. Though renting Office from an ASP may not be cheaper in the long run, it allows companies to reduce their operating cost in any given year.

But for now, Microsoft’s McKeon doesn’t anticipate Office Online eclipsing the more traditional model. “It’s an emerging marketplace right now, and it’ll probably be at least two years before we see any broad-scale significant movement away from our channel buying market,” she said.

Still, ASPs are excited about Microsoft’s move.

“What an announcement of this nature from Microsoft says is that the world’s leading software supplier is acknowledging that there is an ASP marketplace and that it’s starting to happen and they’re starting to embrace it. So it lends a lot of credibility to what a lot of smaller players have been talking about for the last eight or nine months,” said Kevin MacIntyre, senior product manager of Mpowered office Solutions at Aliant Inc., an ASP based in Halifax. Aliant plans to offer Office Online.

WordPerfect Office manufacturer Corel Corp. in Ottawa also agrees that Microsoft’s introduction of Office Online into the ASP market will give the market a push.

“I think, actually, Microsoft adds legitimacy to the whole ASP movement. Right now it’s happening so fast that no one knows exactly what the ASP model is all about. Just the fact that Microsoft has said it’s legitimate certainly adds fire to the whole phenomenon,” said Corel Corp. business development manager Sheldon Speers.

Corel is also offering WordPerfect Office through a pilot program with FutureLink and expects wider role out within two months, Speers said.

“We have a complete solution today and we’re on the verge of rolling out, versus a bunch of announcements (from Microsoft) that say, ‘We tend to go into this market, but we really don’t know how we’re going to do it,'” Speers said.