Since we are almost 12 months from the deadline of Microsoft’s loss of the office suite majority market share, we do need to discuss how to count.
Below is my proposal, subject to Nick’s approval, for counting office market share.
Profit statements from Microsoft business division in FY10, to be released this July, will help us calculate how many copies were purchased this year. Then, we can compare against the number of OpenOffice.Org 3.x downloads, 150 million and counting, to establish how Microsoft’s leading competitor is doing with its distribution. Next, we can count each OpenOffice.Org as a missed purchase opportunity for Microsoft at the cost of $350 per download.
Thus, Microsoft must meet or beat about 53 billion dollars in revenue from their business services division in FY2010.
Unfortunately for Nick and Microsoft, only $18.9 billion dollars was spent on Office and related products in FY2009. Microsoft explained the lack of better profits in the office suite department as such “Revenue from the 2007 Microsoft Office system decreased reflecting PC market weakness, a shift to lower-priced products, and pricing promotions.” Microsoft had struggled in FY09 to compete with the open source office suite and “cloud” competitors such as Google Docs. If Nick or you the reader care to dispute that no-cost options such as Office.Org and/or Google Docs products as a threat to Microsoft’s market share, I give you the below video of Stephen Elop, President, Microsoft Business Division, interviewed by Gartner about how Microsoft was going to deal with the disruptive challenge of these products.
Some may argue that counting downloads is not fair since we can never be sure how many actually downloaded. One download could be done by an OEM to ship on thousands of desktops or thin-clients. One download could be done by a third party which in turn re-brands as its own Open Office product (ie Oracle, IBM) and sells it as a product. One download could be done by a mirror or torrent. One download could be done by a system administrator who pushes the suite across the corporate WAN. One download was done by someone with the Fedora project which packaged the OpenOffice.Org for 23 million users.
I will acknowledge that the offer of counting Microsoft’s office suite market share ignores other office suites such as Apple’s suite and Corel Office with Word Perfect. Other “cloud” products such as Google Docs/Apps and Alfresco also do not enter the discussion. We are also not considering office suites on phones or tablets, as Microsoft has 0% market share in these spaces.
Instead, I believe I can prove that Microsoft lacks office majority market share one year early, this June 2010, on OpenOffice.Org statistics alone. Due to the abundance of the scenarios that I have chosen to ignore, “charging” Microsoft $350 on the “missed opportunity” each time OpenOffice.Org is downloaded is a generous offer.
Some may argue that Microsoft will come back strong with its 2010 product and its online counterpart. However, with Microsoft raising their prices, Google is likely to steal what is left of Microsoft’s corporate office suite market share.
Just in case anyone wants to assert that Microsoft’s other divisions like the ones responsible for Bing or Xbox or mobile phones will cover for the lack of office suite products, on the contrary. This graph from February 2010 depicts the division that sells MSOffice as the company’s most profitable division with entertainment and online services as loss leaders. Meanwhile, Google, Yahoo!, Nintendo, Sony, and Nokia laugh their way to the bank. I must also point out that Apple is the most profitable software company and Oracle is the largest software company.
I will wait patiently for Microsoft’s FY2010 report and Nick’s response. Victory is mine: Come June 30, 2011 Microsoft will not have a majority office suite market share.