Office 2003, which Microsoft yesterday announced has been released to manufacturing, will have estimated retail prices for the Standard, Professional and stand-alone editions match those of Office XP.

Microsoft added that the software will be officially launched on October 21 in New York.

Microsoft recently reduced pricing for Office XP in a move ComputerWire believed would foreshadow the final retail price for Office 2003. Estimated retail price for Office Standard and Professional is $399 and $499 respectively and stand alone Office programs are $299 each.

Several factors are believed to be behind Microsoft’s decision to lower the price of Office 2003. The company is offering an incentive to customers still using legacy editions of Office such as Office 97, which accounts for 30% of the installation base.

Microsoft is also facing a competitive challenge of unknown size in the form of Sun Microsystems Inc’s Project Mad Hatter, due next month. This Linux-based desktop features open-source desktop productivity and browser alternatives to Office and Internet Explorer.

Sun’s vice president of engineering for desktop solutions Curtis Sasaki told ComputerWire yesterday, that despite Microsoft’s decision to effectively lower pricing for Office 2003 and XP the suites remain unnecessarily expensive for customers who do not require all their functionality.

We believe the price for the customer has to be reasonable and that the customer will only pay for what they use, Sasaki said.

A Microsoft spokesperson said the company’s decision to cut pricing of Office XP stemmed from a related decision in May to add value to the company’s Software Assurance program. He added customers buying single copies of Office are very sensitive to price.

We wanted to respond to their sensitivities, the spokesperson said.

He added, though, price alone would not attract customers to Office 2003. As such, the company has integrated Office 2003 via branding and XML with other Microsoft products.

Office 2003 is now part of the Microsoft Office System, although integration has also been seen as an attempt by Microsoft to enhance the value proposition of Office 2003 to customers unwilling to upgrade or struggling to justify the expense.

The Microsoft Office System features three new products that integrate with Office 2003 – Office InfoPath 2003, Office Live Communications Server 2003 and Office OneNote 2003. Other system members are Office SharePoint Portal Server 2003, Exchange Server 2003 and Office Live Meeting.

We are solving [customers’] problems through integration and innovation, that requires more than a new feature in a word processor, the Microsoft spokesperson said.

Source: Computerwire