Office Aims at Small Business

The small business strategy for Office has been fine-tuned with the 2007 release of the suite, which includes an updated Small Business edition. Microsoft is using bundled applications for publication, customer management, and accounting to induce small businesses to move up to the latest version of the suite, and sales to those customers could deliver some revenue growth for hardware vendors and resellers. However, small businesses are conservative and many are short on IT staff and cash, posing unique sales problems for Microsoft and its partners.

Focused Applications for Upsell

The Office team estimates the number of small businesses (defined by Microsoft as having fewer than 50 employees or 25 PCs) at 37 million worldwide. Unlike their enterprise counterparts, which buy through volume licensing, small businesses often buy Office preinstalled on new PCs. Microsoft classifies some small businesses as “innovators” (who upgrade frequently for their own needs) and others as “integrators” (who upgrade to exchange files with larger business partners and vendors). However, most small businesses are late adopters (like those recently depicted in Microsoft advertisements as dinosaurs) who update Office and their PCs together on a five- to seven-year cycle.