It may be winter, but that’s not stopping Apple from reaping what it can with its beefed-up iWork ’08 productivity suite. And that’s a smart move for the company, analysts say, because when the next version of Office makes its long-awaited debut next month the Microsoft offering should easily retain its grip on the office productivity market for the Mac.
Microsoft Office has long been the dominant player when it comes to suites that offer word-processing, spreadsheet, and presentation tools. But two factors have converged that make Office’s hold on the market appear vulnerable.
First, it’s been more than three years since Microsoft released Office 2004. In the intervening years, Apple has switched to Intel processors to power its hardware, and most high-profile apps have been rewritten to run natively on Intel-based machines. Office remains the highest-profile exception.
Second, Apple has ramped up the pressure on Office by revamping its own office productivity suite, iWork. This summer, Apple unveiled iWork ’08. In addition to adding more word-processing features to its Pages page-layout app, Apple also introduced its new Spreadsheet tool, Numbers. Those products, combined with the already well-regarded Keynote presentation, turned iWork into a suite that could match what Office had to offer—with the added benefit of the software coming directly from Apple.
According to NPD Group, Apple’s efforts with iWork have paid off. The revamped suite has captured 16 percent of the office productivity application sales on the Mac, with Microsoft’s Office taking the rest. While that figure is “a success for Apple,” NPD says, the market-research firm doesn’t feel that number is sustainable once Office 2008 arrives on the Mac.
Microsoft has announced that Office 2008 will ship on January 15, 2008. Originally, Microsoft planned to have the updated productivity suite out by the second half of 2007 but bumped the release into 2008, citing a “perfect storm” of factors that hampered development efforts.
So why is Office 2008 expected to retain the large market share enjoyed by its predecessor? Because the mixed feelings Mac users might have for Microsoft don’t necessarily extend to the company’s products, says Chris Swenson, director of software industry analysis for NPD.
“A lot of customers are happy with their version of Office,” Swenson said. “That doesn’t mean that iWork isn’t doing well, but it’s hard to displace Office that’s been there for so many years.”
Despite the addition of a spreadsheet app to iWork—or even the existence of alternative suites like NeoOffice —Microsoft Office continues to enjoy its status as the default office productivity suite for the Mac. For many companies, particularly those in multi-platform environments, the choices for word-processing and spreadsheet applications rarely extend beyond Microsoft, according to Swenson.
“It’s not so much about buying a cheap product or buying Office,” he added. “It’s ‘Do I keep using the existing version of Office or do I upgrade?’ Microsoft is essentially competing against itself.”
Alternative suites could try to compete with Microsoft on price. The full version of Office 2008 will cost $400, with upgrades available for $240. In contrast, iWork ’08 sells for $79.
However, Microsoft also plans to offer a $150 Home and Student Edition of Office 2008. And, Swenson adds, the company does a good job of cutting the price of these versions of Office at critical selling times to maximize sales. Indeed, Microsoft is currently offering a free version of the Special Media edition of Office 2008 to anyone who buys the Standard or Teacher and Student versions of Office 2004.
The sales campaign has been part of an aggressive online effort on Microsoft’s part to promote Office 2008. The company has already set up an information site to tout new features in the upgrade. Among the features promoted at the Office 2008 site are the suite’s revamped toolbox, a new Ledger Sheets tool in Excel for handling common tasks with pre-formulated cells, new templates and styles for Word and PowerPoint, and an updated calendar interface in Entourage.
“Office 2008 is going to be a successful product and its going to take the air out of iWork’s tires," said Swenson.
Not that Apple necessarily sees iWork as an Office killer. When the company released the updated suite back in August, executives said the goal was to create applications that offered a Mac-like approach to tasks such as word-processing and spreadsheets.
“[Some people] want to enjoy the way they work, they want their work product to look great, and [they want to be] fundamentally integrated into iLife” Rob Schoeben, Apple’s vice president of applications product marketing told Macworld in August. “If you buy into all that, that’s going to be appealing.”
Apple isn’t the only major developer offering an alternative to Office. In the past year, Google has bolstered its slate of online applications, though, like Apple, the search-engine giant insists it’s not looking to take on Microsoft and Office.
That’s just as well, NPD’s Swenson said. “We’ve seen zero effect with these software as a service applications,” he added. “For things like office apps, we struggled to find any significant percentage of people that use them.”
This story, "Analysts: iWork strong, but won't affect Office sales" was originally published by PCWorld.