With the update of its personal productivity software this year, the software giant is hoping to subdue its competitors, writes John Collins

It may have got lost in the acres of coverage surrounding the impending release of Windows Vista, but Microsoft will simultaneously release the 2007 Office System, a major update of its ubiquitous personal productivity software.

Microsoft's Irish operations play a central role in the development of Office. A research and development team of 250 focuses on delivering fully localised versions of the product in 30 different languages, while 100 other languages, including Irish, get a less thorough make-over as part of the company's local language programme.

While customers in smaller markets might have previously had to wait months for a local version of a new release, Microsoft now ships new releases at almost the same time around the world, which presents a huge management challenge for the team in Dublin.

With Office 2007 being released to volume licensees - ie major PC manufacturers - this November and the retail and PC pre-installed version available next January, one of the most senior executives in the Microsoft Office group, Peter Pathe, was in Dublin recently to oversee progress.

Pathe's official title is corporate vice-president of Microsoft Office authoring services. That means he looks after Word, Publisher, OneNote and InfoPath, some of the key programs that make up the suite.

The Office team in Microsoft has always been recognised for delivering regular updates to the product on time approximately every two to three years. The same cannot be said of the Windows division, particularly with regard to the much-delayed Vista release. Bill Gates admitted as much recently when he took the decision to appoint Steven Sinofsky, Pathe's former boss, to take control of Windows development.

While Office 2007 will feature enhancements to familiar applications such as Word, Excel and PowerPoint, as well as adding a couple of new members to the family, from creation tool InfoPath and notetaking program OneNote, Pathe believes it will be fundamentally different to previous releases.

"Our focus traditionally was on document creation, way back when," says Pathe. "Over time, we increased the scope of our mission to really address information worker productivity. We continued to help people create documents but now we are also helping them share them and communicate with others."

While it may take users some time to really take advantage of the collaborative functionality, one of the major design changes is a new user interface. Gone are the drop-down menus that we've all become so used to, replaced with something Microsoft calls "the ribbon". Click on a particular menu item and all the relevant tools appear in graphical format in a horizontal space at the top of your document.

"One of the design goals for the new user interface was to expose functionality that already existed in the product," says Pathe. "And exposing new functionality in such a way that it is not just shoved in front of you so that you have to use it and that it seems like clutter if you don't."

Pathe's comments hint at a perennial problem for software designers, known as Pareto's Principle or, more commonly, the 80/20 rule. In effect, it means that 80 per cent of the users will only ever use 20 per cent of the functionality of a package.

With so many features added over the years, the challenge can be how to expose them to users, but also what to retain and what to add.

"The irony is never lost on me. People say 'your product is so big. I only use 10 per cent of it and it's bloated but, by the way, could you add this feature?'," says Pathe. "And they say this without a hint of irony. But it is true - people do want more capabilities in their software."

While many people will be attracted by the new features, the software landscape has changed dramatically since the last Office release at the end of 2003. Microsoft used to face competition just from the like of Lotus and Corel, which had their own office suites that users installed on their PCs locally. But now a range of companies are offering software functionality over the Web that was once the sole preserve of desktop applications.

On the day I met Pathe, Google unveiled its Calendar application that, when used with Gmail, may give 80 per cent of Outlook users all the functionality they need.

Does Microsoft feel threatened by the new crop of web-based applications that some commentators have dubbed the web-top as opposed to the desktop? "The key area where we've tried to use the new environment, where PCs are connected and there are powerful servers available, is to enhance existing software in Office rather than try to replace what people have.

"We think there's a very good place for desktop applications hosted natively. There's a lot of processing power there. It's very responsive. For things that require user interaction and local processing, we think it's a good place to have the code. If you're disconnected you can still work. We don't think that world goes away, but you can enhance it with web-based services."

The competition is not just coming from the new vanguard of web companies but also a constant thorn in Microsoft's side - the open source community.

The free OpenOffice, and the low-cost StarOffice version of it from Sun Microsystems, are gaining some ground on Microsoft, but it is minimal in terms of the overall Office market share. More worrying is the attention being given to the XML-based file format they use, Open Document Format (ODF).

Open source advocates are saying all manufacturers of office software should support ODF so that customers can be assured that they will be able to access their data no matter what program they used to create it.

Microsoft's answer has been to create the OpenXML standard, which will be implemented in Office 2007 and is being ratified by the ECMA, the European standards body.

Critics have suggested OpenXML is just a ploy by Microsoft to prevent ODF growing in popularity. In response Pathe points out that Microsoft has been using XML in Office for several releases and because the formats are open, third-party developers will easily be able to write add-ons for Office products.

"We've been working on this format for many years," says Pathe.

"The format is rich. It can support with 100 per cent fidelity all of our documents from the last 20 years. All the features that users have created in that corpus of documents, we can represent faithfully in this format."