This past Monday Microsoft announced a free service offering called Office Live Workspaces. The product allows you to access and share documents online and is quite similar to existing offerings such as BT Workspace and Basecamp.
It's interesting, but not surprising, that the free service is being billed as "the online companion" to the $500 Microsoft Office suite. Ever since Microsoft first announced the OfficeLive brand they have struggled a bit to explain the subtleties and clarify how it all relates to the $14 billion desktop productivity franchise (.doc .ppt. xls.)
From my perspective, the top level SaaS message is now much tighter. Specifically, I think Microsoft has done a great job of hammering home the "software-plus-services" message as the official "call to arms" for a slow, careful, transition from a legacy business based on "one time licensing revenues" to a future business based on "recurring subscription revenues".
Undoubtedly, this is a huge "innovators dilemma" for the folks in Redmond -- the hardest part of which is figuring out what pieces of the legacy business are expendable first -- and what pieces of the legacy business must be protected for as long as possible.
It 's interesting to read between the lines of the OfficeLive Workspace announcement because I think there are some clues which suggest that Outlook is more expendable than the rest of the Office suite.
Consider this, Eric Gilmore, a Microsoft senior product manager for Microsoft Office said "People are e-mailing documents all the time which is an inefficient way to do things when you want to work together." I personally believe that Eric is 100% correct. Email is simply not an effective place for small group collaboration.
Therefore, the question is how should people work together? The answer, of course, depends on who you ask. Google, IBM, ZoHo and others have their opinion. But, at least according to Microsoft, people should author documents in Word, Powerpoint, and Excel (and pay $500 for the privilege) -- and then share documents via "free web services" with teams of people.
It all makes perfect sense and is well aligned with Microsoft's long, slow, careful transition from "licensing revenue" to "services revenue". I think time is on their side -- at least for now.