(2022-08-29) Chin Microsoft Office Suite Success

Cedric Chin: MsOffice case - Suite Success. Pre-1995, however, Office was nowhere near as dominant. Lotus 1-2-3 and WordPerfect — not Excel and Word — were the respective market leaders in the spreadsheet and word processing application categories

In 1984, the launch of the Apple Macintosh signalled that the times were a-changin’.

Microsoft quickly followed suit in 1985 with Windows 1.0.

Not everyone believed in the future of GUI computing though. The majority of computer users at the time were already used to typing commands and navigating with the keyboard only.

the Office product teams were working hard to overtake WordPerfect and 1-2-3 on Windows.

but a new competitive front was about to open. In 1989, Microsoft's marketing team experimented with packaging their already-popular Macintosh apps together as a software bundle. (bundling)

Following the same successful marketing strategy, Microsoft Office for Windows was launched the following year with Word, Excel and PowerPoint.

At the end of 1993, Microsoft’s Applications Division started developing and marketing the Office bundle instead of just the standalone apps

While Office may have seemed like a unified bundle of products, in reality, each of the product teams (Word, Excel, PowerPoint) were still acting like independent tribes and operating under different release timelines.

The release of Office 4.0 laid bare this costly flaw. In October 1993, Office 4.0 was released with new versions of Word, Excel, PowerPoint, and Mail. But there was a major and embarrassing problem — the Excel and PowerPoint teams didn’t ship their products on time. This meant customers who purchased Office 4.0 in the first few months received “air boxes”

Those products finally shipped the following year, in April 1994.

Lotus took full advantage of Microsoft’s clumsiness. They advertised their full suite of apps, all ready to go,

In early 1994, Microsoft Technical Assistant (and rising star) Steven Sinofsky explored Lotus SmartSuite 2.1 to see if it was legitimately an integrated and consistent bundle of apps. To his surprise, the applications were not consistent

Sinofsky went further and hunted down other inconsistencies and inefficiencies within SmartSuite.

Using this information, Sinofsky drafted a nearly 30-page memo articulating the Office bundle as a strategy. It spread quickly within Microsoft, as it was the first clear articulation of a path to beating 1-2-3 and its ilk.

Another reason the Sinofsky memo was taken seriously within Microsoft was that his argument for greater Office integration was aligned with Bill Gates’s technical obsession of the time. Gates had been beating the drum for more shared code internally for several months by this point

Despite the apparent popularity of Sinofsky's memo and the Office bundle’s preliminary success, the bundle strategy was still not a clear cut choice. Sinofksy wrote, years later, that the decision to bundle or not to bundle was a timeless question

The data was murky. At the time, most customers were not buying Word and Excel at the same time. Even fewer were purchasing PowerPoint.

Eventually though, Microsoft decided to make the strategic pivot towards Office. They reorganised, created a new business unit under DAD called Office Product Unit (OPU) and offered Sinofsky the role of group program manager. DAD would now house the business units of Word, Excel, PowerPoint, and the newly created OPU

Employees did not like this reorganisation. The Word, Excel, and PowerPoint teams felt like they were being told to do more with less.

They chose the biggest constraint — ship Office as a completed product and time it so that it would launch within 30 days of Windows 95.

On top of this, DAD’s leadership had also decided that they would work on two releases of Office. The first would be in sync with Windows 95’s launch and the second would be in sync with the successor of Windows 95.

The developers believed that “nothing” could be done in 12 months

Word had already made great strides against WordPerfect at this point in time. By 1994, it had won 90% of the word processing market

DAD decided to hedge their bets by allocating only 15% of their teams to Office 95 while everyone else worked on Office 97.

OPU continued to standardise the apps for Office 95. They standardised the commands available in the toolbar, the ability to include content from Word or Excel in PowerPoint, and then they standardised even the pixel size of the toolbar (a debate between 15 or 16 pixels)!

During Office 95’s development, the Word team had the breakthrough idea of background spell check.

In early 1995, the Windows 95 team chose early summer as their ‘release-to-manufacturing’ date. Office 95 was ready to launch simultaneously

On August 24, 1995, Microsoft released Windows 95 and Office 95 with a launch event hosted by Jay Leno. Microsoft had doled out more than US$200 million (US$383 million in 2022 dollars) on marketing

While Microsoft’s leadership had developed conviction around the bundle strategy, it was ultimately mistakes by Office’s competitors that sealed their fate. Lotus had delayed building apps for Windows 95 — they were bought by IBM a few weeks before Windows 95’s launch; IBM had a competing operating system called OS/2.

WordPerfect had teamed up with Borland (known for its Quattro Pro spreadsheet app) in 1993 to build a bundle for Windows, but two different companies building an integrated bundle proved to be challenging.

After launch, Windows 95 sold seven million copies in five weeks to become the world’s most popular operating system. (This case ignores how big a jump forward Win95 was. Or was the biggest technical leap at 3.0?)

By 1992, WordPerfect had amassed a market share of over 60% for non-GUI operating systems. (What was excel/lotus split at this time? Also interesting to focus on market share vs growing the market (adoption curve))