Although HP and Dell will now bundle low-end Corel software with cheap PCs instead of Microsoft Works, the move will not hurt Redmond. Microsoft makes money on Office from enterprises and SMEs, who buy company-wide software licenses. While Office’s widespread domestic use does help boost business sales, few home Word and Excel users are likely to switch to WordPerfect and Quattro.
HP will ship Corel’s WordPerfect Productivity Pack with new PCs, instead of Microsoft Works.
Hewlett-Packard has followed Dell’s recent example, and will no longer ship Microsoft applications with its cut-price Pavilion range of home desktop PCs. Instead of Microsoft Works 6.0, it will supply Corel’s WordPerfect Productivity Pack. This includes the eponymous word processor, plus the Quattro Pro spreadsheet program.
The deal sounds like a snub to Microsoft – but it isn’t. Rather, the key motivation is price. PCs are cheap – a bottom-of-the-range Pavilion costs $529.99, compared to $479 for a home user version of Microsoft Office – and some publishers are more willing to slash the cost of bundled software than others.
Even though Works 6.0 is just a rudimentary word processor and spreadsheet, there is still little reason for MS to sell it for next to nothing. Not so for Corel: the company is desperate for revenue, and the move will do little to cannibalize existing or potential sales. So while the switch should help the Canadian firm, the direct impact on Microsoft should be low.
There is another issue: widespread home usage of Microsoft’s products also improves their position among enterprise clients. If everyone you hire already understands Word and Excel, the training costs of moving your company to WordPerfect or Quattro are prohibitive.
However, there’s little chance that HP and Dell will affect this situation. For a start, the PC market is largely saturated: most PCs sold are replacements for ones that people already own (which often have Microsoft applications installed). In this context it matters little whether the software used at home comes with old machines, new machines, is bought under cheap student licenses, or is acquired illicitly.
Microsoft makes money on Office from corporate and SME clients, who buy their software on enterprise-wide licenses; there’s little or no scope for PC vendors to change this fact. So while this move may cheer WordPerfect fans and anti-Redmond advocates, it’s unlikely to have any real-world impact.
Related research: Datamonitor, Industry Review: Technology – September 2002 (BFTC0772)
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