Microsoft Expected to Unveil Update to Office Suite

Microsoft plans Monday to unveil software features crafted to jazz up Office 15, the next big upgrade of its ubiquitous suite of office-productivity programs, industry sources say.

Much is at stake. Microsoft's core engine of profit — selling licenses for Windows systems packaged with the Office suite that includes Microsoft Word, Excel and PowerPoint — is under intense pressure as competitors roll out products aimed at taking away market share.

Office 15 is scheduled to be available early next year, bristling with hooks into Windows 8, the latest upgrade of Microsoft's operating system software, which will be generally available in October, according to several sources familiar with Microsoft's plans. They declined to speak on the record because they were not authorized to discuss details. Microsoft declined to comment.

Some 84% of the world's personal computers run on Microsoft's Windows. But many of Microsoft's corporate customers still use Windows XP. Those using the current version, Windows 7— out since 2009 and paired with Office 2010 — might decide against upgrading.

"Skipping a version or two saves costs," says industry analyst Jack Gold. "It's critical for Microsoft to show real benefits to upgrading."

Google is pushing hard to get Office users to switch to Google Docs, an Office-like applications suite running on Google's servers and accessible on the Internet. Apple is championing how clerical duties can be done on its iPad , which uses a touch-screen interface instead of a keyboard. Neither Office nor Google Docs works on the iPad.

Office on a desktop or laptop Windows PC remains by far the dominant clerical tool. It accounted for $22.2 billion of Microsoft's nearly $70 billion in fiscal 2011 revenue and $14.1 billion of operating income, by far the most of any unit.

"If Office 15 is a bust, those repercussions will impact and potentially injure virtually every part of Microsoft," says analyst Charles King at research firm Pund-IT. It could hamper Microsoft's push to gain a bigger foothold in search advertising and home entertainment, he says.

Microsoft has kept tight wraps on Office 15, fueling talk it might enable editing of Adobe PDF documents and even run on iPad. "The more devices Office 15 is available on, the better it is for Microsoft," says Trip Chowdhry, managing director of Global Equities Research.

Others, such as King, say it is more likely that Office 15 will run exclusively on Windows 8, or on Windows 8 and Windows 7. Windows 8 is a touch-friendly operating system. Scheduled for general release this fall, it will come in a version for PCs and another to power Microsoft's new Surface tablets.

Key advances are likely to come in Office 15's capacity to mesh with the Surface tablets, Microsoft's challenger to the dominant Apple iPad, and in hooking Office 15 into Microsoft's free Internet-accessible services, says Wesley Miller, analyst at technology research firm Directions on Microsoft.

One thing seems certain: When Microsoft CEO and chief pitchman Steve Ballmer takes center stage at a Monday press conference, he likely will tout Office 15's touch capabilities.

"Microsoft hasn't had a large amount of time to broadly overhaul these applications, but I believe a large percentage of the time has been spent ensuring that the applications are touch-centric." Miller says.