IBM Software To Add Office Functionality

IBM Software plans to embed free spreadsheet, word-processing and other desktop-productivity functions in its WebSphere Portal, channel sources said.

"They'll put 80 percent of what most people use in Office and make it available to corporate customers via the portal," said one source familiar with the plans.

Ken Bisconti, vice president of messaging and advanced collaboration solutions at IBM Lotus Software, confirmed that the company built J2EE document, presentation and spreadsheet applications that will be embedded in the portal for free.

The bundle is slated to show up later this year as part of IBM's much-touted computing-on-demand plan.

The capabilities "will be somewhat hidden from the user, but if a business process occurs, it'll start [the apps] up," said Larry Bowden, vice president of IBM's Lotus Products group.

Though IBM hasn't distinguished itself in desktop software, WebSphere application servers and portals have good traction in business accounts. The bundling strategy may give IT buyers and solution providers leverage to drive down Microsoft Office licensing costs, said one solution provider, who requested anonymity. "Portals are high on the CIO's list of things to buy," he said. "And now IBM can say, 'Look, you can pay for half of the portal with what you'll save on Office.' "

Last year, many industry observers deemed Microsoft's new enterprise software licensing model a de facto price hike. But Jeff Raikes, group vice president of business and productivity services at Microsoft, said a large account still pays less than $100 per PC per year to upgrade Office.

Some IBM insiders downplay the direct competition with Microsoft Office, saying that the planned office-productivity apps are for "deskless" workers.

But others say Office is clearly in IBM's crosshairs.

"They see Office vulnerable over pricing and feature glut," one IBM partner said.

Another factor that could loosen Microsoft's desktop stranglehold is that Office applications now save data to XML format, although just how standard that format is remains open to debate. In the past, Microsoft used proprietary file formats that were difficult for rival products to handle.

Microsoft must figure out "how to finesse the move to XML without having it hurt their grip" on the desktop market, said Dwight Davis, vice president at research firm Summit Strategies. "It's not clear how they'll pull that off, except there's a lot of market inertia."

Microsoft also will need to nudge Office users to upgrade to the upcoming Office 2003 in June, observers said.

IBM has a spotty track record in desktop software. It fielded and then folded its own desktop application business long before it acquired Lotus in 1995. IBM's OS/2 also flopped as a desktop operating system.

Still, one large business partner familiar with the vendor's plans remained somewhat upbeat: "Is IBM smarter than it used to be on the desktop? I'm optimistic. It can't be any dumber."