IBM Targets Microsoft's Office Franchise

SAN FRANCISCO -- IBM(IBM Quote) wants to take a bite out of Microsoft's(MSFT Quote) lunch.

But it will have to get in line.

On Tuesday, Big Blue launched a support service and new product aimed at eroding the Office software franchise and Microsoft's small-business server market.

The move comes as Microsoft, under assault from free desktop software offered by Google(GOOG Quote) and on-demand software from a host of start-ups, moves toward a mix of traditional licensed software that works with subscription-based services, which it bills as software plus services.

For the first three quarters of its current fiscal year, Microsoft took in $12.5 billion selling client software, including Office, up 12% year over year.

IBM announced its free Lotus Symphony desktop software suite in September 2007, in an attempt to displace traditional Office software applications, such as Outlook (email and calendar), Excel spreadsheets and PowerPoint presentations. The software is based on the open-source Open Document Format.

The problem in getting established businesses to accept freeware is that they are not apt to make the switch, especially when it lacks support.

To bolster Symphony's status with dependability-minded corporations, IBM added a support service Tuesday. The service is priced from about $25 to $50 per user, depending on the number of users. The price caps out at $25,000 per corporation.

Don't look for the Symphony service to contribute big bucks to IBM's top line. "This is not a serious revenue play for IBM," IDC analyst Melissa Webster said Monday. Rather, IBM is making a "competitive gesture" by attacking a rival in the hope that companies faced with tighter IT budgets will spend on other IBM software instead of an Office 2007 upgrade.