Office 2003 power comes at a cost

Office 2003’s advances will come at what could be a steep cost, as increased reliance on other Microsoft products threatens to hike licensing costs.

As it touts Office 2003, formally launched last week, Microsoft is shifting from positioning Office as an applications suite toward packaging it as a system, highlighting its integration with Microsoft server products such as SharePoint Portal Server, Live Communication Server, and the forthcoming Rights Management Services. Although Microsoft has kept Office 2003’s price tag close to that of Office XP, businesses that want to use some of the software’s collaboration and rights-management features will need to run the latest version of Microsoft’s corresponding server software.

Jupiter Research analyst Joe Wilcox estimates that businesses using Office will see their Microsoft licensing costs rise 10 percent to 40 percent if they want to take full advantage of the software’s new features.

“We’re seeing now much more of a focus on vertical integration between the client and the server,” Wilcox said. “Microsoft is trying to position Office as the front end to a lot of back-end processes. They have a huge presence on the desktop, so they want to leverage that into all these back-end server products.”

Integration traditionally lowers software costs, but Microsoft’s deepened product interdependencies have the opposite effect, increasing the number of products customers need to license, Wilcox said.

“Microsoft will argue that, long-term, this integration will cut down maintenance and operating costs and provide customers better ROI,” Wilcox said. “To be honest, that remains to be seen. We won’t know until customers actually start putting all the pieces together and see how much it actually saves.”