Lotus Symphony has Microsoft flailing for new Office distribution model

June 17 2009

In January, IBM announced the first pre-load agreement for Lotus Symphony with our partner Archos.  The Archos 10 netbook includes Symphony as part of the out-of-the-box functionality.

Last week, Archos announced a new 10s netbook.  Interestingly, the 10s includes Office 2007 -- unusual for any laptop or netbook.  Normally, adding Microsoft Office to a new PC is an additionally-purchased item -- at Dell and Lenovo right now, this charge can be anywhere from US$90 to US$150 for basic editions.  Yet the Archos 10s netbook comes with Microsoft Office for free:

ARCHOS is granting you a 12 month free licence. Beyond this period, you can choose whether you want to buy it or not. It's your call.
OK, wait a second.  A 12-month timebombed version of Microsoft Office?  This is a brand-new approach from Microsoft...not available from the big names.  Of all the places for it to crop up, it shows up with the organization that happens to be IBM's first OEM agreement distributor for Symphony.

Microsoft is scared of Lotus Symphony -- scared enough to give away Office.  Sure, they probably figure the "hook" is that the netbook user will use Office for a year and then be likely to license it...try and buy is not a bad distribution tactic.  But it's one that they are not using anywhere else.  For good reason, too.  Microsoft's financials indicate that over 80% of the revenue for the Windows operating system comes from OEM distribution.  The percentage is likely lower for Microsoft's Business Division, which has those lock-in Enterprise Agreements in place.  Still, OEM is a pretty important part of the $19 billion division's revenue.

If a 12-month try-and-buy were to become the norm for Microsoft Office distribution, a whole lot of $90-150 purchases would be deferred, perhaps never to happen.  All the more reason why consumers should be wondering right about now why this one particular Netbook is going to come with Microsoft Office for free, while PCs charge extra?  This must be what Microsoft meant in this March quote from Stephen Elop:
"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?"
The Motley Fool got it right two weeks ago when they said that "Microsoft Fears the Netbook".  That fear is translating into a desperate move to give away Microsoft Office.  

The response from other PC and netbook manufacturers is obvious, right?  Give me a call -- we'll happily put together an agreement to help you distribute Lotus Symphony at no charge, too.

Ed Brill | Highland Park, IL USA Category:  Lotus Symphony  Add/View Comments [29]

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  1. 1  Ed Maloney  | 6/17/2009 7:02:16 PM

    Actually...just yesterday I helped a relative install Symphony on her Netbook. She also has a limited-time version of MS Office installed. She was delighted to have a free alternative to MS Office. Now she'll tell 2 friends and they'll tell 2 friends and...

  1. 2  Paul Robichaux http://www.robichaux.net/blog | 6/17/2009 7:39:09 PM

    Um, Ed.. hate to say it, but MS has had try-then-buy *downloads* of Office 2007 for a year or two now. True, the trial period is only 60 days, but I suspect that if you looked around a bit more you'd find that some hardware OEMs have included the trial version. Obviously Archos feels like including a 12-month license (for which they presumably pay MS) is enough of a value add to make it worth their while. Given Archos' tiny share of the WW market I'm not sure this is enough to proclaim any broad trends.

  1. 3  Ed Brill http://www.edbrill.com | 6/17/2009 7:46:49 PM

    Paul, if you know much about the netbook market, you'd know that no netbook companies are paying software companies to pre-load software... at best it is about free. I have no special knowledge here but a $300 netbook doesn't have the margin to pay Microsoft much of anything for a 12-month trial. That it's a 12-month trial is quite different than a 60-day trial (which, you are correct, is pre-loaded on some PCs and netbooks, probably like Ed's @1 above). 60-day is clearly demoware, while 12 months is enough to get some people to use it.

    Either way, it's different enough and coincidental enough that it seems defensive.

  1. 4  Michael Dwyer  | 6/17/2009 8:57:57 PM

    I have some friends who have bought PCs/laptops for low usage, with a 'free' 60 day trial of Office 2007 included. One problem occurs immediately. They send me attachments with the 'standard' extensions of docx and xlsx etc. When I tell them that those files cannot be read (at least not without lots of extra work on the recipient's part), their reaction is 'why didn't the shop tell me about that'.

    Then, when the 'free' trial is over, they either have to stump up with the $$ to buy the 'real' version, or have a lot of unusable files that they cannot access. Again, 'why didn't the shop tell me about that?'

    When I tell them about free software such as Linux, OO and Symphony, the reaction is the same. Spreading the news by word of mouth can help overcome what the shops are telling them.

  1. 5  Henry Ferlauto http://www.geniusinside.com | 6/17/2009 10:00:52 PM

    Two thoughts:

    (1) One aspect is simply the "weight" of Office 2007 vs. the CPU in a typical netbook.

    I see it like a pickup truck trying to tow with only a 4 cylinder engine.

    (2) Yes, Microsoft is afraid of Symphony as well as any other competing product that would be preloaded on a computer. They remember their history. In the OS wars of the 1990s, one of the contributing factors to Windows success (and OS/2's failure) was preloading. Germany, the one country where OS/2 had some decent traction (about 30% market share at one point) had vendors preloading PCs with OS/2.

    They are simply trying to nip things in the bud, to use an old cliche.

    IBM would do well to find other OEMs to preload Symphony. I also think it would be worth while to put a CD in magazines or have them in POP (point of purchase) display boxes at retailers, like AOL did in the past. (I do not recommend the carpet bombing via the postal service.)

  1. 6  Nelson Morris  | 6/17/2009 10:05:38 PM

    Ubuntu Netbook Remix + Notes 8.5 + Symphony work just fine for me for casual use on my Dell Mini 9.

  1. 7  Nelson Morris  | 6/17/2009 10:05:47 PM

    Ubuntu Netbook Remix + Notes 8.5 + Symphony work just fine for me for casual use on my Dell Mini 9.

  1. 8  Volker Weber http://vowe.net | 6/18/2009 12:39:46 AM

    You mean, you pushed Mike Tyson, and he punched you in the face knocking you out, and now he is defensive and afraid of you? ;-)

  1. 9  Kevin Pettitt http://www.lotusguru.com | 6/18/2009 12:59:05 AM

    @8 - Hm, didn't Mike Tyson go to jail, broke? I'm liking this metaphor :-).

  1. 10  Rick Sizemore  | 6/18/2009 1:43:21 AM

    I don't think Archos changing over, and MS giving them a time bombed 1 year version has much impact. Microsoft isn't "Flailing" as a result of Symphony being displaced on a Netbook with sales in the in the 10th of a percent of the market.

    What they appear to be doing is whatever it takes to get over the next 12 months in the consumer space. Most of the Netbooks come with nothing extra, suite, AV, barely a browser, and are completely focused on the consumer space. MS wants to get to the new subscription/ad cloud based revenue model, and I think this is the play.

    It's not about us, or open office or anything else. Now, where they are having issues is that customers aren't renewing, and living with 2003 till a new version comes that makes them think they'll buy it, and keep it for 5-6-7 years. That's why they want the enterprise space to move to cloud subscriptions.

  1. 11  Ben Poole http://benpoole.com | 6/18/2009 2:40:55 AM

    @5 the "weight" of MS Office is indeed considerable… but Symphony isn't too light either. Both suites will run on a Netbook.

  1. 12  Henny Breijer http://www.breijer.com | 6/18/2009 6:17:31 AM

    To be honoust with you Ed, quite frankly I'd rather have a fast wireless connection and use browser-based productivity tools instead. Isn't that what a Netbook is all about or am I mistaking here..

  1. 13  Tim Haugen  | 6/18/2009 6:24:02 AM

    @4 - Symphony 1.3 can open MS Office 2007 file formats... (can't save them, but not "lost files")

  1. 14  Hal Ninth  | 6/18/2009 6:51:25 AM

    Deleted

  1. 15  Brian O’Curran http://www.doingmorewithless.biz/dmwl/blog.nsf | 6/18/2009 8:51:56 AM

    My neighbor just ordered a laptop from the IBM employee purchase site (he's sitting at my kitchen table right now getting it configured) and it came with Symphony pre-installed. I was delighted to see that it was there. I do believe Symphony is having an impact. My customers are looking hard at anything to save a few bucks right now and Lotus Symphony is a legit alternative to Office for most users.

    Great post Ed!

    Brian

  1. 16  Henry Ferlauto  | 6/18/2009 9:27:03 AM

    @11 - Agree - Both could use "Weight Watchers."

    I do wonder if over time, Symphony will get more efficient like Notes & Domino have with each subsequent release as IBM learns more about Java & Eclipse every day.

  1. 17  Carl Tyler http://www.iminstant.com | 6/18/2009 10:49:06 AM

    A couple of things, these are not new MS tactics, these tried an true tactics done by MS for many years, you think it's new because Microsoft hasn't had any company with industry awareness do anything for the last 10 years so didn't have to do anything.

    Have you seen the contract Microsoft has with ARCHOS? Can you say with 100% certainty that MS doesn't get any money for this? ARCHOS used to ship Linux on the device cos it was free, then they started paying money to ship Windows XP, XP now accounts for some huge percentage of OS shipped on netbooks. Also Microsoft in the past would traditionally do deals on the OS price to get Excel and Office out there, obviously once copetition dissapeared they stopped doing that.

    The thing to find out is if MS really are giving it away free, under the anti trust stuff from a few years back they may not be allowed to, that issue could be that IBM settled that with MS for close to a billion dollars so it maybe that IBM doesn't have the right to complain about antiturst anymore in the desktop market.

  1. 18  Bill Geimer  | 6/18/2009 2:12:51 PM

    I have been using Office 2007 for well over 6 months. Today, when I had to put together a quick spreadsheet for my management, I spent more time looking through the tabs and menus than I did working on the data. It not only weighs too much, but its far to complicated for those who do not use it every day.

    I imagine most folks could get my with Symphony or less.

  1. 19  Philip Storry http://www.not-so-rapid.com | 6/18/2009 4:06:22 PM

    If IBM is serious about pre-installs, then they should get some Software Sources up for Symphony.

    By which I mean that distributions like Ubuntu and Red Hat allow you to specify additional URIs to check when they check for OS updates.

    It's very easy to do. IBM can easily support the small bit of traffic that an apt-get update check generates - even if they have to support it for millions of machines!

    And it makes Symphony part of the machine. Updates to Symphony - for instance, for security - Which must surely be a selling point for both Symphony and the OEM?

    Anyway, just my tuppence. :-)

  1. 20  Andy Steven http://www.hillclimbr.com | 6/18/2009 5:50:15 PM

    could leverage Notes offline capabilities on these things. the way they are used means you wouldn't always have a net connection..

  1. 21  Bernie  | 6/18/2009 7:46:10 PM

    If the trial period extends to 3 years, then we are in good shape.

    After all, I believe most people will buy a new netbook by the time 36 months come around. Also, these are OEM versions of MS Office and are not transferable, so is it worth the money to use it for just 2 years then?

  1. 22  Mike  | 6/19/2009 1:56:51 AM

    Ed, you're not presenting IBM anymore. I'm really sorry to see how you've changed your mindset, from a trusted advisor to a cheap Jack. Get back to track boy.

  1. 23  Mike  | 6/19/2009 1:56:54 AM

    Ed, you're not presenting IBM anymore. I'm really sorry to see how you've changed your mindset, from a trusted advisor to a cheap Jack. Get back to track boy.

  1. 24  Mike  | 6/19/2009 1:58:52 AM

    Ed, i'm really sorry to see how you've changed your way, from a former IBM FTE to a cheap Jack. Get back to track boy. Think about the value of your blog????

  1. 25  Lars Olufsen http://www.olufsphere.com | 6/19/2009 3:42:12 AM

    @7 & @8 - Not only did he go to jail, broke. He did it due to brutally raping a "fan" (read: a Microsoft customer).

    And in the ring, he lost every match he had against an opponent that actually dared standing up to him, despite using ways and means that wasn't exactly inside the rules.

    On the topic itself, I think Ed is on to something, although I'm not sure about the conclusion. But no doubt in my mind ... My Lenovo came with a 60-day Office 2007 trial preloaded. That was immediately ditched. Had it been a one year trial, it would have been activated, and MS would have had the chance to "win me over".

    As it is, I'm happily running Symphony and once upgraded to 1.3, expect not to look back at all.

  1. 26  Ed Brill http://www.edbrill.com | 6/19/2009 6:51:57 AM

    @23 - 25: Dear Marc O. Tensi, former IBMer now at Microsoft, if you are going to attack me personally on my blog you should at least get it right the first time.

  1. 27  Bill Buchan http://www.hadsl.com | 6/19/2009 12:38:18 PM

    And whilst it had a link to a download, Symphony was not in fact pre-loaded.

    ---* Bill

  1. 28  Ed Brill http://www.edbrill.com | 6/19/2009 12:49:09 PM

    10 or 10s? They are different models.

  1. 29  TimB  | 6/19/2009 12:52:33 PM

    Likely a lot of things have MS shifting gears. Their drastic lowering of the price of XP to run on Netbooks has changed the Netbook/XP market share dramatically. If they do end up putting Windows 7 onto Netbooks - they will do so at a dramatic price reduction there as well.

    I recently bought a new laptop, and given the choice of installing my aging copy of Office 03, or downloading Symphony 1.3 (available a week ago!) -- chose the latter. It's great! Too bad, new Dells and HPs can't come with Symphony preloaded as opposed to the craptastic "MS Works", or the additional premium of full-blown Office.