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Office, SharePoint 2010 face competition, tight economy

Microsoft needs to convince IT pros to upgrade to SharePoint 2010 and Office 2010 if it wants to lock them in for at least another three years.

Microsoft said that SharePoint 2010 and Office 2010 will ship on May 12, but enterprise adoption plans will hinge on PC upgrade cycles, economic conditions and growing competition from Google.

Microsoft Office is still far more popular in enterprises than Google Docs is, but some observers say Google's collaboration capability offers better document-sharing features than SharePoint does. The collaboration feature lets users upload any type of document, presentation or spreadsheet -- including Microsoft Word, Excel and PowerPoint documents -- and share them over the Web from any computer or device, and it costs far less than a SharePoint license.

With that option looming, Microsoft must convince IT pros to upgrade to the next versions of SharePoint and Office to lock them in as customers for at least another three years, said Michael Cizmar, a Google Apps reseller and president of IT services firm Michael Cizmar + Associates Ltd. (MC+A) in Chicago.

It won't be a hard bargain for enterprises that have successfully implemented past versions of SharePoint; they will want to move to Version 2010 in anticipation of the new features, and many already have plans to upgrade when Service Pack 1 hits next year, Cizmar said.

SharePoint 2010 will only be supported on 64-bit hardware, which means more memory and better performance compared with 32-bit systems. However, users will also have to buy 64-bit hardware if they don't have it already. If they're willing to deal with the cost and effort, SharePoint 2010 users can get better integration with Office and architectural improvements that let the software handle larger lists and user libraries, as well as integration with the search tools Microsoft gained through its acquisition of Fast Search & Transfer in 2008.

"With the acquisition of Fast, they have filled a lot of the holes," Cizmar said. "But people who don't like SharePoint will use [the upgrade cycle] as a catalyst for new product discovery."

Cost-sensitive organizations -- such as universities, nonprofits and governments -- are also more likely to consider a move to Google for Docs and collaboration instead of paying Microsoft's license fees, Cizmar said. Microsoft also offers Office Web Apps and Office and SharePoint Online, but its online product prices are still higher than Google's.

Although competitive products will entice some IT pros away from Microsoft, economic conditions will have a larger impact on upgrade plans, especially where the upgrades compete for budget dollars against cost-containment projects such as virtualization, said Rob Helm, research director at Kirkland, Wash.-based analysis firm Directions on Microsoft.

Those who do stick with Microsoft will logically upgrade to Office 2010 as part of a PC refresh cycle and Windows 7 adoption. For many companies, this will be a major change that won't happen quickly.

"It is going to take companies that skipped Vista and Office 2007 at least a year to evaluate Office 2010 because they will have to do a lot of compatibility testing that they avoided before," Helm said. "The adjustment is similar to the jump from XP to Windows 7. The Office file format and user interface is all new, and different macros and add-ins will be in there."

Enterprises that upgrade to new version of both Office and SharePoint will gain the most benefit because some compelling features in Office 2010 are symbiotic with SharePoint 2010. For instance, the new multiuser editing capability in Office lets more than one person work on same file at the same time via SharePoint 2010. There are also improvements in Excel, such as PowerPivot for SharePoint, which lets users analyze massive amounts of data.

That said, organizations running Office 2007 but not SharePoint may not see a need to upgrade to Office 2010, especially if they do not have upgrade licenses through Software Assurance, said Michael Silver, an analyst at Stamford, Conn.-based Gartner Inc.

But, Silver said, those still on Office 2003 will see Office 2010 as a logical landing point because support for that older version will end in 2014, and "Office 15" will probably be too long of a wait for those users.

Let us know what you think about the story; email Bridget Botelho, News Writer, or follow @BridgetBotelho on Twitter.

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