New Web-linked Office faces Y2K worries

By making it communicate in the Web8217;s quot;HTMLquot; language, and adding Web publishing tools, the Office software links users, and Microsoft8217;s future, seamlessly to the fast-growing Net.

But Ballmer conceded that potential buyers might be chilled this year as they lock their systems down ahead of the 2000 year changeover, amid fears that computers will have trouble processing quot;00quot; digits.

quot;Things could be a little slow the second half of this year,quot; Ballmer said at the launch of retail sales for the Office software. quot;But whatever slowdown we see in the second half will be made up in thefirst half of next year.quot;

Ballmer said the company expects steady gains from the Office software and quot;some kind of surgequot; after this week8217;s retail sales launch. But because Microsoft relies more on subscription and upgrade fees from its existing sales base than it did in the past, sales increases will be more gradual than previous launches.

Microsoft Office vice president Steve Sinofsky said 15 million licenses have already been sold for Office 2000 through non-retail channels, mostly in upgrades by corporate users. The previous version, Office 97, has sold about 100 million licenses, Microsoft says.

The huge installed base of Microsoft users tends to assure success of each comprehensive software upgrade. But the new Office system is also being launched ahead of a major upgrade of the Microsoft operating system, Windows 2000, so many users are likely to wait for the upgraded operating system, analysts said.

SG Cowen analyst Drew Brosseau said that his firm found in a recent study that there is quot;a lotof interest among organisations in upgrading to the Office and Windows 2000.quot; But Brosseau said the upgrades will take place more slowly than for past Microsoft products.

Ballmer, the hard-charging No. 2 to Bill Gates, pitched the new product to a packed audience at the new Sony Metreon high-tech emporium in downtown San Francisco as a way to get on the Internet fast.

Ballmer said the premium Office, sold for 399 with a rebate included, unveiled partnerships with two leading Internet service providers, Concentric Network Corp and Verio Inc to act as custom hosts of quot;Web collaboration servicesquot; using Office and let users create Web sites on the fly.

The software also lets officer workers hooked to the Internet collaborate on document creation, even over long distances and using non-PC devices.

Microsoft is struggling to maintain a leadership role in the computer industry as the Internet becomes the central focus of users. Analysts see the transformation of Office into an Internet-linked product as animportant hurdle for the company, which has been the dominant player in desktop computing but not the fastest-moving on the Web. Ballmer said Microsoft also is addressing concerns about Microsoft8217;s role in the industry as the PC ceases to the focus of all computing. The new Office software is designed to accept some files from handheld computers and devices.

quot;The PC as a device will remain essential,quot; Ballmer said.quot;But it will be augmented by other devices8230;Our vision is to give people and organisations the ability to do whatever they want, whenever, they want on any device linked to the Internet.quot;

The new Microsoft Office will be able to share files with all current versions of Windows NT and Windows 95 software. quot;We learned our lesson with Windows 95,quot; said Sinofsky, referring to the previous system upgrade that would not work with files produced on earlier Windows versions.