Then the European Union's Court of First Instance issued a stern rebuke of the company's competitive practices even as it affirmed a European Community antitrust fine in excess of $487 million. Now Google, IBM, and Yahoo have separately announced free software products that all have Microsoft Office squarely in their crosshairs.

Calling the timing of the three product announcements very interesting, Forrester Research principal analyst Kyle McNabb suggested that the rival offerings might be able to achieve "some short-term successes at Microsoft's expense, with some of the new alternatives becoming more credible than others."

Although none of the three free offerings appears to have the big razor-sharp teeth of a killer shark, each might be able act like piranha "to take a nibble or a sliver" from Office's commanding share of the market, McNabb noted. Nevertheless, he said, no one should expect these rival offerings to achieve inroads that would "amount to anything material over the next 12 to 18 months."

Online Productivity Tools

From the enterprise perspective, a lot of experimentation will need to be done, explained McNabb. "And that's going to come as people start to look at their alternatives and weigh them against each other." But before proceeding, McNabb said, enterprises will need to segment their employee populations to find out which workers don't need the entire breadth of what Microsoft Office has to offer.

"Some companies may have some non-high-cost info workers that don't really need Office," McNabb noted. "All they may need is a spreadsheet or word editor in order to fill out some very basic forms and documents."

The fact that IBM is standing behind one of the new products should make I.T. managers more confident in pursuing the possibilities, McNabb went on to say. "IBM has done a good job of differentiating itself from Microsoft by telling I.T. about improvements that can be embedded into a business process," he added.

Meanwhile, the latest online offerings from Google and Yahoo are focusing on "tech populism," McNabb noted. "All of us use software technology outside of work and we have a nasty habit of bringing back into work what we have produced outside."

Lightweight Microsoft Office?

Google and Yahoo both expect to feed off this tendency by offering lightweight, easy-to-use online productivity tools, McNabb explained. "Their hope is that the more we use online alternatives to Microsoft Office in our roles outside of work, we will bring them into work and ask our I.T. peers to help us to do that," McNabb said.

However, AMR Research analyst Jim Murphy noted that Microsoft still has a lot of ground to give. "At some point they could offer their own lightweight version of Office," he speculated.

"Part of the value proposition would be that Microsoft's lightweight online version would readily integrate with the richer features of Office on the desktop in ways that rival offerings could not," Murphy explained. "But right now they can't handicap their ability to sell the latest version of Office."

The software-plus-services model is the direction in which the industry is headed, McNabb concluded. "It's an extremely sound strategy that Microsoft, IBM, and Google all understand."