Watch MSFT — There may be a big payday ahead for them

Microsoft
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PowerRating) has been noticing this and is working hard on
addressing these issues. Since it is a geek-driven culture, I don’t think it has
done a great job explaining why this is important (in fact, it might not even
realize why it’s important to end users).

For the past two years or so, third party vendors have been using dot.net and
analysis services to create solutions that allow users to have something with
the look and feel of Excel but addresses the data- and referential integrity
issues. Since it’s heavy lifting, not many IT shops have wanted to do the same
sort of thing with routine spreadsheets.

There’s a good chance Microsoft is going to "begin" to address the referential
integrity problem in the next big release of office. If it does a good job of
it, most large corporations and most mid-size companies will see a real value to
upgrading office, which means a big payday for Microsoft.

Be watching this.

I think it keeps Office from being a commodity at least a couple of years longer
and helps sell server products. I’m not sure it has much impact on the OS
(operating system) business unless Microsoft also requires its latest OS as a
minimum requirement. Not positive, but It should be doable with current XP and
possibly even Win2K. But it might need (or just decide to require) some services
available only if people upgrade its OS. This wouldn’t be a smart move on its
part since the cost and hassle of a total upgrade would slow down adoption
regardless of the benefits. I’m not sure how it would affect Linux OS since
there are people busy figuring out how you get Windows off app servers and
they’ll probably continue to hurt Microsoft at this layer in larger companies.

In terms of what this means for MSFT stock price, Street expectations are
moderately positive. By growing more positive on MSFT (two-year view) this is a
departure for me from the more negative stance I’ve held on MSFT since Summer,
2002. (I wrote in greater detail about

my concerns with MSFT on December 6)

I am not sure where expectations are about how soon and how fast we see a major
Office replacement cycle. But something like this could create a compelling
reason for people to upgrade to a new release of Office and it would require a
large percentage of Office users within a corporation to upgrade since the whole
point would be to improve enterprise wide collaborative processes like
budgeting.

If expectations for Office are a standard kind of cycle and/or reluctance to
upgrade, this type of uptake would be a positive surprise and positive for the
stock. But I wouldn’t get too excited: by positive for the stock, I’m thinking
this could push the stock back into the high-end of the range in which its been
trading the last three years. In other words, I’d see upside to the high $20s.