Microsoft, Lotus Software Battle Heats Up

IN an effort to put a human face on computing, Microsoft Corporation chairman William Gates went to new lengths this week.

A live satellite broadcast from New York began with the image of a computer that metamorphosed quickly into Mr. Gates's smiling, mischievous face. The executive then unveiled a software package designed to be so easy to use that it amounts to ``a whole new way to work.''

The announcement is part of a high-stakes battle between Microsoft and Lotus Development Corporation. The two companies are the main suppliers of software ``suites'' - packages that include word-processing, spreadsheet, database, and graphics programs. Customers are increasingly turning to suites instead of buying single applications because the bundled software offers discount prices and simplified installation and support.

The glitzy satellite conference used rock music and some hip performance art as well as traditional computer jargon to try to build enthusiasm for the latest version of Microsoft's Office suite. Analysts gave the announcement a cool reception, however.

For one thing, Office 4.0 represents another chapter in the industry's long history of ``vaporware'' - software products that are unveiled before they are actually available.

The four main pieces of Office 4.0 will be brought to market gradually, starting with the word-processing program in a month. The spreadsheet will follow soon after, but the upgraded database is not scheduled to arrive until the middle of next year. Microsoft customers who buy the suite now will be mailed the upgraded software as it comes out.

``That's a major problem,'' says John Donovan, a software analyst with WorkGroup Technologies Inc. of Hampton, N.H. ``That flies in the face of one of the major reasons people buy suites.'' Mr. Donovan adds that Lotus's software package, SmartSuite, is a strong competitor. ``They've got a wonderful suite.''

Microsoft is the market leader, having introduced ``bundled'' software in 1988, but Lotus has been gaining momentum in recent months. Jack Armstrong, senior product manager at Lotus, says that where Microsoft once sold seven suites for every one sold by Lotus, the ratio now is only about 2 or 3 for each Lotus sale.

This tougher competition explains Microsoft's eagerness to publicize its upgraded Office, Mr. Armstrong says. Lotus's earnings have been rebounding, aided by another product, Notes, that helps people share information within a company.

Microsoft, meanwhile, has warned analysts of a slowdown in its growth. Still, the Redmond, Wash., company remains much larger than its Cambridge, Mass., rival.

``I cringe sometimes when I see some of the things Microsoft can do with their marketing muscle,'' Armstrong says. He claims that ``virtually everything'' in Microsoft's new offering ``has been in SmartSuite for some time.'' For example, Lotus won awards a year ago for its easy-to-use mail merge (for mailing a form letter to many people); Microsoft highlighted a similar capability in its show Tuesday.

But Microsoft has issued a 15-page evaluation claiming numerous advantages of Office over SmartSuite. The company hopes to wow customers with nifty new features, such as:

* Dragging a chart from the spreadsheet to a document in the word-processing program.

* Modifying the chart at the click of a mouse to display different data: One minute the chart shows a music company's sales for all instruments, the next minute only subtotals by category.

* Getting helpful advice from the software's ``Tip Wizard,'' a light bulb that signals when the user could have done a task more efficiently. By clicking on the light bulb, the user can get tips for the future. ``For the first time, the computer is tracking what you do,'' Gates says.

Office and SmartSuite are priced at the same level ($299) for customers who currently have applications from either company.

of stories this month > Get unlimited stories
You've read  of  free articles. Subscribe to continue.

Unlimited digital access $11/month.

Get unlimited Monitor journalism.