Microsoft devising Office for netbooks

Microsoft is bending its Office franchise toward netbooks and is developing packages that are unique to that market, according to the head of the company's business division.

Speaking at Tuesday's Morgan Stanley Technology Conference, Stephen Elop, president of Microsoft's business division, which oversees Office among other software, said the Wave 14 of Office products would incorporate netbooks into its overall product plans.

“I won't get precise with details, but I think we can do better with netbook attach,” said Elop, a member of CEO Steve Ballmer's executive leadership team.

“There are new ways to package and monetize SKUs that are unique to the netbook market. From the Office perspective if someone is spending just a few hundred dollars on a netbook, how much will they spend on productivity software?”

Elop didn't provide an answer to his questions, but he gave an example of how Microsoft has priced Office for various consumers, such as students who at one time could purchase the suite for as low as $69.

With the flat PC market, netbooks have become a hot area of interest for Microsoft, which says that Windows is now on 80% of netbooks . The company is planning to offer a Windows 7 version for netbooks.

And last week Ballmer told financial analysts, “We need to carefully think through what kind of pricing and value we put in netbook-specific SKUs versus full PC consumer SKUs, versus the business SKU. That's important to us.”

In the Office 14 wave of products Microsoft plans to release Web-based versions of Office productivity applications, specifically Word, Excel, PowerPoint and OneNote.

Microsoft, however, did say in October that the Web-based Office tools would not have an offline mode. The company Microsoft currently has lightweight “read-only” tools for Word, Excel and PowerPoint. Users could potentially have versions of documents stored on their netbooks and use the tools to read those documents. Microsoft would have to add editing capabilities to the read-only tools, however, to make the Web-based Office applications compelling for business users.

Elop, who also oversees Microsoft Business Solutions and the unified communications (UC) groups, laid out his strategic areas of investment as Microsoft navigates through the down economy. He said his division would “double-down” its investment in software-plus-services including Web-based Office applications. He said he would do the same on the collection of SharePoint features such as collaboration, search, portal and workflow that all represent a big opportunity for Microsoft.

And he said investments would double-down around UC, especially in terms of disrupting the traditional telephony market.

But he also said some areas would see a pullback, including business intelligence, where he specifically mentioned Performance Point Server, which was shuttered in February.