Is It Time for Consumers to Move to Free Office Suites?

Peter O'Kelly and I fielded a call yesterday from Donna Fuscaldo of Fox News Business. She posed the following question: "Should consumers use these new free software packages [e.g., IBM Lotus Symphony or OpenOffice.org] as an alternative to Microsoft Office or Google's browser-based software?"

It's an interesting question, and one that shows that even general business reporters are noticing what Peter calls "an embarrassment of riches" in the space. Given that some suites are free (versus hundreds of dollars), you sort of feel the urge--at least I did--to say "Yes." However, the answer really isn't that simple.

The label "consumer" implies that's a person's only role. However, consumers are also workers, students, churchgoers, and volunteers. In other words, each consumer works with a variety of peer groups, and which system those groups use colors an individual's choice. For example, Burton Group (the company I work for) uses Microsoft Office. So while saving a few bucks is attractive to me, I don't really want to have to learn another user interface. In my case, my work system drives my consumer use.

But not all people work--retired people on a fixed income (such as my mother) are quite price-sensitive. Maybe a free suite is appropriate for them. However, a different dynamic kicks in there. I serve as computer support for my mother--a role common to people who work in high tech--so when she calls with a problem I want to be familiar with what she's using.

Based on these two examples, it may seem that I think Microsoft Office will reign far into the future, based purely on user inertia. Perhaps, but I'm not so sure. I do think people feel Microsoft Office is expensive. While you can buy a Home and Student edition of Microsoft Office for $125 on Amazon.com (contains Word, Excel, and PowerPoint, and valid for three licenses), it doesn't have Outlook, and is just one of eight Office flavors. If you have money to burn, you can spend $679 (SRP) on the Ultimate Edition. To put that price into perspective, for the same amount of money you can buy (1) seven DVD players or (2) a 23" HDTV or (3) a PC from Dell. While Microsoft has held steady on its software prices, the price of hardware has plummeted, making Office comparatively more expensive than it was in the past. While Microsoft realizes this--witness the Home and Student edition--it is still being coy with the cost, preferring to obfuscate pricing via marketing. Let's face it, Microsoft could make things simple and just say, "The suggested retail price of Home and Student edition is $42 per user." Since it hasn't, people are feeling gouged, and they're looking around.   

As Peter points out, there are really three options:

1. Microsoft Office, with its new user interface in Office 2007.
2. Free software, such as IBM Lotus Symphony and OpenOffice.org, which look a lot like Office 2003 and the versions before.
3. Web-based packages such as Google Apps and ThinkFree.

I think people will move to options two and three--certainly not in droves--based on their price-sensitivity and generational viewpoint. For example, people who are comfortable with the Office 2003 interface will probably continue to use it and not upgrade to Office 2007. If they're still holding on when Microsoft withdraws support for Office 2003, they may move over to one of the number two options.

At the same time, college students and workers in their twenties grew up with Facebook--in their view, e-mail and software are incredibly old fashioned. I see them being receptive to the online suites, which will evolve into Web 2.0 collaborative platforms. So while I don't see Microsoft Office losing significant market share any time soon, I do think the time has come for some chipping away here and there.