Many product strategists are, like me, old enough to remember software stores like Egghead. Those days are gone. Today, consumer packaged software represents a very limited market – the software aisle has shrunk, like the half-empty one at the Best Buy in Cambridge, MA (pictured).


Only a few packaged software categories still exist: Games. Utilities and security software. And Microsoft Office – which constitutes a category unto itself. Some 67% of US online consumers regularly use Office at home, according to Forrester’s Consumer Technographics PC And Gaming Online Survey, Q4 2009 (US). Office is the most ubiquitous – and therefore successful – consumer client program aside from Windows OS.

Office 2010, Microsoft’s latest release, will continue to succeed with consumers. On the shoulders of Office 2010 rests nothing less than the defense of packaged software in general. It’s also the most tangible example of Microsoft’s Software Plus Services approach to the cloud – a term that Microsoft seems to be de-emphasizing lately, but which captures the essence of the Office 2010 business goal:

To sell packaged client software and offer Web-based services to augment the experience.

Office 2010 includes a number of improvements in usability, new features like Sparklines and Social Connector, and its perhaps most noteworthy new feature, Office Web Apps. Office Web Apps are designed explicitly to help consumers leverage the power of “the cloud” (a term consumers don’t use) while also not cannibalizing sales of the client program. Invariably, some reviews will compare Google Docs and Office Web Apps head to head as if they were meant to be comparable offerings. This is a mistake. Office Web Apps are a complement to the client program, more of a feature than a standalone competitor to Google Docs.

In some ways, the Office versus Google Docs debate doesn’t merit a lot of consideration – it’s still no competition. In terms of usage and penetration, Google Docs remains a failure – so far, anyway. Only 4% of US online consumers say they regularly use Google Docs, according to Forrester’s Consumer Technographics PC And Gaming Online Survey Q4 2009 (US). Let’s think about that for a second: We’re talking about a free software-as-a-service offering from one of the top brand names in technology. The offering has been available for over three years from Google (and two more years if you count Writely before Google purchased Upstartle). And yet only 4% of consumers are onboard. Why is this the case?

  • The browser-based experience remains limited. Whatever advances have happened in programming, the fact remains that browser-based programs offer a more limited experience than client software, as of today.
  • Consumers have a deep, longstanding relationship with Office. Consumers have years’ worth of digital assets designed in, and still most suited to, Office.
  • Local computing power is plentiful and cheap. Unlike enterprises, consumers aren’t thinking “how can I move to ‘the cloud’?” Instead, they will leverage what’s most convenient. All that computing power in their existing PCs still sits ready to use.

What does this all mean? That many consumers would rather purchase or pirate Office than use free Google Docs.

Office 2010 will continue this success in the consumer market. It’s one of a dwindling breed of heavy client programs (outside of gaming), but it’s got numerous advantages:

  • Consumers use it at work. Their employer in many cases trains them on Office. And with Office at home, they can bring work home when they want.
  • Office 2010 was developed with vast customer inputs in mind. The Office team didn’t sit on its laurels, but took the product design task seriously.
  • It’s now complemented by Office Web. Office Web isn’t a panacea for all sharing and collaborating needs, but it will help consumers easily manage files across multiple PCs and to share with their friends.
  • It will ship on many consumer PCs. Finally, the product will be ‘ready to unlock’ on lots of new consumer PCs sold in coming years. With the purchase of a product key card, it becomes convenient for consumers to buy, even if they didn’t pick up a copy when they purchased their newest PC.

What do you think? Will Office 2010 continue the success of Office software in the consumer market?