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Microsoft couldn't be Microsoft without Word/Office

Tim Greene | Oct. 25, 2013
Microsoft's productivity apps are $22 billion cash cows

As Microsoft Word turns 30 on Oct. 25 it is not only the world's most pervasive word-processing applications, it is a cash cow for the company.

Word is an original application in Microsoft Office, the productivity suite that customers must buy to get Word and that has sold more than 750 million copies worldwide. It has been the single best selling software product in U.S. stores for years.

Microsoft doesn't break out revenues from Word itself or from the Office suite, but it does for Office System products, which includes Microsoft Office, Office 365, SharePoint, Exchange and Lync.

For the fiscal year just ended, Office System products generated 90% of revenues for Microsoft Business Division about $22.2 billion. More significantly for Microsoft as a whole, the Office products account for 54.4% of the corporation's after-tax profits, according to figures in the company's 10-K filing with the Securities and Exchange Commission.

Microsoft's Office 365 subscription service, which falls within Office Systems, has become a $1.5 billion business on its own in two years. That's more than Microsoft as a whole took in during 1990, the year it wrapped Word, Excel and PowerPoint together to create Office.

It turns out that was a turning point for the company because that year for the first time Microsoft took in more revenue from applications than it did from the sale of system software, and it has never looked back.

Today for many users Microsoft Word is synonymous with word processing, a distinction it has won over the years through hard fought competition and some shrewd product strategy, but at the outset, its success was far from assured.

Back in the fall of 1983, when the company's revenues were $50 million, Word rolled out as Multi-Tool Word, one of more than 300 word processing apps then available WordStar, Electric Pencil, MultiMate, pfs:Write, PostScript, WordPerfect and XyWrite among them - most of which were wed to a single piece of hardware or one operating system. Word's precursor, Bravo, was one.

Bravo was the product of a team at Xerox's Palo Alto Research Center headed up by Charles Simonyi. It boasted a what-you-see-is-what-you-get word-processing interface designed to run on a prototype Xerox personal computer called Alto. That meant users could look at the screen and see a fair approximation of what the document would look like when it was printed out.

Shortly after Bravo was completed, Microsoft hired Simonyi away, licensed Bravo, and developed the team that brought Word to fruition and eventually produced Microsoft Office.

The initial commercial version of Word supported just two operating systems, MS DOS and Xenix, Microsoft's version of Unix. Other Microsoft apps at the time such as the spreadsheet program Multi-Plan ran on about 50 different computers with different architectures and chips, Simonyi says.

 

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