Sales of Microsoft Office 2010 Have Been Disappointing

Microsoft (News - Alert) Office 2010 has been on the retail shelves for few weeks now. But, consumer excitement for this software upgrade is not visible. Plus, the software giant has also been quieter about selling this version, preferring to release the boxed version without a lot of hoopla and fanfare.

According to the market research company NPD Group (News - Alert), to-date the sales of Office 2010 have been disappointing. Although, the sales are comparable to the sales trend of Office 2007 so far this year, the units and dollars are down from Office 2007's initial two weeks, according to NPD's Weekly Tracking Service results, reported on the company's blog July 13 (http://www.npdgroupblog.com).

In the NPD blog, vice president and industry analyst Stephen Baker, commented, "With the release of 2010 Microsoft has to confront the success of its retail strategy head-on. Selling such a heavily used product into a base that has already been upgrading at a very high rate is an enormous challenge. While Office 2010 has many compelling new features, it is always an uphill battle to sell a high installed base product based on new features alone."

Microsoft has a very different battle to fight in this release than predecessors. According to the research firm, Microsoft was very successful with sales of those products and its program to eliminate the free versions of Office floating around consumers' homes and replace those with legitimate, upgradeable products that produced incremental revenue for Microsoft. NPD report shows that lifetime sales for Office 2007 at retail exceeded $1.5 billion for the 3.5 years it was on the shelf. A sales level that equated to approximately 10 million new copies of Office into the market in addition to the sales of PCs with Office pre-installed and the existing versions.

Last month, in a release distributed during the launch of the product, Microsoft reported a survey of Office 2010 beta users. The company found that 75 percent of the users plan to buy Office 2010 within six months. The Office 2010 beta program had more than 9 million downloads - more than six times the size of the 2007 Microsoft Office beta program - indicating strong consumer interest in Office 2010.

While free online alternatives like Google (News - Alert) Docs are certainly playing a role in the overall productivity software ecosystem, it is a virtual certainty that the slower than expected initial sales of Office 2010 have nothing to do with free alternatives, according to Baker. In the same blog, Baker stated "These products have little awareness among the mainstream consumer who is the retail boxed version's primary customer. Over time it is certainly likely that we will see some slowdown in retail sales as consumers alter their productivity software habits, but that time is not now." He goes on to add,  "Mainstream consumers have not embraced the concept of the cloud, nor are they likely in the short to mid-term, making most of the questions around free software moot. The real short-term question is how Microsoft is able to match promotional fervor, pricing, and sales to the long-term opportunity to sell incremental versions of Office into a saturated consumer marketplace."