• by Ross Fadner , October 21, 2003

Microsoft Tuesday released its much anticipated new Office System 2003 suite, including a powerful new tool that could change the way businesses communicate with themselves and with each other. The offering includes a new Office Live Communications Server that could do for B-to-B communications what instant messaging systems have done for consumer online communications.

The Live Communications Server facilitates communication with clients via instant messaging, voice, video and data collaboration - all within an enterprise application. In other words, this product is for business partners and other close contacts--not consumers. But just like consumer instant messaging applications, every means of communication via LCS happens in real time, which will enhance the interoperability of the Microsoft Office System, ensuring that all office applications are fully integrated through the server.

At least one marketing executive, Beyond Interactive vice president and managing director Nick Pahade, believes the system could facilitate B-to-B productivity by increasing the touch points for communication between businesses.

LCS uses smart tags, so if, for example, you were reading someone's story as a document in Word, then as the cursor goes over their name a tag will show up listing the various ways the author is available to you at that time. The tag will let you know whether they're on IM, what their phone or email is, whether they're in or out of the office for the day--whatever information is available at present moment.

The service also enables users to swap documents on different applications, such as displaying an Excel spreadsheet on an IM page, Word, or PowerPoint document. LCS is available over several forms of communication too-from SNS, to PDA, to wireless.

Security will most definitely be an issue for a fully integrated real-time service. A Microsoft spokesman maintained that LCS functions within an IT security system.

Even so, most corporate users operate under some form of IT security and still receive spam and other viruses, so corporations may want to reevaluate their faith in their IT systems before raising the stakes to real-time technology.

Although this may be somewhat misleading, LCS is considered to be a variation of an instant messaging service. The Radacati Group reports that there are currently about 52 million corporate instant messaging accounts compared with 421 million corporate email accounts worldwide. Largely on the strength of Microsoft's Live Communications Server, they further estimate that by 2007, the $125 million market will grow to $377 million.

Time Warner's AOL Instant Messenger currently dominates the IM consumer market, at 50 million users, and 34% of the market. In an attempt to claim a portion of the corporate market, AOL has turned to selling their IM service to corporations with enhancements like usage monitoring.

But, as some analysts observe, it will be very hard for corporations to pass up on the LCS option particularly if they can use it in conjunction with MS Office. "Once you have Messenger integrated into Office, the scenarios are compelling," says Stowe Boyd, collaborations consultant at A Working Model. "It's a tough proposition to convince yourself not to go down this path."

AOL executives will hope that the price tag puts corporations off. However, it is not altogether unreasonably costly for a corporation to use the LCS feature. The complete Office System 2003 carries a $400 price tag, plus the LCS cost which is $740 per server, and $25 per user, annually.

According to a Meta Group study, on the strength of LCS and Office System 2003, Microsoft should have 40 per cent of the corporate market by 2007, followed by current market leader IBM with 30 per cent, then AOL and Jabber, with 10 per cent each.

Carrie Riby, media director of marketing and communications firm Roberts Communications, considers the beneficial B-to-B implications. "Something like (LCS) has so much potential. It definitely adds another dimension to conference calls, especially if you can make it a visual experience. And of course there is nothing more convenient than not having to travel to do business."

Riby also expects the Microsoft product to take off particularly because they've been so adept at extending use of their services to third party operators to find innovative ways to improve upon them.

Also included in the Microsoft Office System 2003 are updated versions of the core office suites and programs, updates to other information work programs like Sharepoint, FrontPage, Publisher, and Project, as well as two new programs, One Note and Info Path.