Last weekend marked the 30th anniversary of the release of Lotus 1-2-3, and Tuesday was the formal ship date for Microsoft Office 2013. The fact that, by and large, business users no longer care about 1-2-3, and just about all of us run Office got me thinking about why certain enterprise software becomes a standard and just what it takes to change standards.
Lotus 1-2-3 was not the first “killer application” – it was not even the first modern spreadsheet. That honour goes to VisiCalc, which Dan Bricklin and Bob Frankston originally created for the Apple II. VisiCalc was a revelation – a completely different way of creating budgets and plans from what anyone had seen before.
VisiCalc was ported to other platforms and soon there were other spreadsheets, notably Sorcim's SuperCalc and Microsoft's Multiplan. (Keep in mind that this was in the era before software patents – I often wonder how the software world would have been different if VisiCalc had been patented).
These spreadsheets were moved to many different platforms, but it was fundamentally the same program on each. They ran better with faster processors and more memory, but didn't really change. When the IBM PC came out in 1981, VisiCalc was available.
But the IBM PC had more memory and, in some ways, better graphics than the earlier generation of machines. This presented an opportunity to do more than the earlier spreadsheets did. In this period, Software Arts, the company Bricklin and Frankston created to develop VisiCalc, and Personal Software, the company that marketed it, were feuding.
Mitch Kapor, who had been a project manager at Personal Software, had a vision for software that would do a lot more. In early 1983, along with writer Jonathan Sachs, he released Lotus 1-2-3 for the IBM PC's PC-DOS. In addition to performing the spreadsheet functions, 1-2-3 also had basic graphics functions and the ability to work with a table-based database (features of spreadsheets ever since). It was also easier to use, and its "slash commands" – "/" followed by a letter – became a standard. In addition, it allowed for macros that let spreadsheet users and third-party developers really extend the program. In short, it was a lot more powerful, and it quickly became the must-have product for the IBM PC.
So why did Microsoft Excel, and later Microsoft Office, replace it? Some say it’s because Microsoft created the Windows environment and Office's tie-in to Windows gave it an insurmountable lead. But while this connection was undoubtedly important, I'd argue that the experience of both companies in writing software for the Macintosh was just as vital.
When the Macintosh came out in 1984, three third-party software vendors were highlighted: Lotus Development Corp., Microsoft, and Software Publishing Corp. (which was known for its pfs:File database). At that point, a lot of the focus in the industry was on "integrated software," with many vendors taking the lesson from 1-2-3's success that users wanted software programs that performed more of the typical business tasks. Even on DOS, Lotus released a version called Symphony, which added word processing and had a pretty good run.
And all that Jazz
On the Mac, Lotus took the integrated software concept and ran with it, creating a program called Jazz (and later a version called Modern Jazz) that included all the features of 1-2-3, plus word processing, like Symphony, in a graphical user interface. But it was too far ahead of its time; the Mac just couldn't handle it.
Microsoft, instead, initially came out with standalone programs like Multiplan, Chart, and eventually Word. It was a couple of years later (in 1985) that the first version of Excel came out. In a twist of fate, that version of Excel was closer to 1-2-3 in terms of features than anything Lotus had. Lotus Jazz was more ambitious, but Excel worked and quickly became the Mac standard.
It took Microsoft another couple of years to come out with a Windows version of Excel, and even that wasn't an immediate hit, as the PC-compatible market didn't move to Windows until the early 1990s. But while Lotus and Microsoft produced both Windows and OS/2 versions, Microsoft seemed much more committed to Windows, and it showed in the products.
Microsoft released Word for Windows in 1989, and the first version of Office for Windows (which combined Word, Excel, and PowerPoint) came out in the autumn of 1990. It wasn't until a few years later, though, that the individual applications started to really share components and work together particularly well.
Overall, the success of Windows helped Office, and Office helped Windows. By the time Windows 95 and Office 95 came out, both were standards, and by that point, Lotus was more focused on its Notes mail and groupware product, and Lotus Development was sold to IBM in 1995.
Ever since then, just about every major business has been standardised on Microsoft Office.
Lack of competition
So why has there been so little competition? In part, because Office has become a standard with document compatibility. While there have been lots of word processors that can read Word files (most do fine with text, though there are differences in formatting), there really isn't a substitute for Excel, because so many people use macros that just don't run in other spreadsheets.
What would it take to replace Excel, or Office in general? I don't think price matters all that much because for a typical business, the cost of Microsoft Office, about $100 (£70 or so) per employee per year, is far less than the cost of retraining. So it's likely to take some new platform, or some new style of working that makes a difference. For years, that hasn't happened, but now we're seeing some possibilities.
Web-based office applications, notably Google Docs, seem to be gaining traction, especially in government and education markets, which are price-sensitive. What seems to be really compelling about the platform is how users can access documents from any machine, and can more easily collaborate with others. Microsoft is offering similar features with Office 365 – see our review of the Home Premium version which came out earlier this week – but it seems to be playing catch up.
Of course, Windows now faces more competition than ever – especially with the iPad and Android tablets – and that may extend to Office as well. For the iPad, Apple has pushed its iWork suite, while QuickOffice (now owned by Google) and Dataviz's Docs to Go (now apparently owned by BlackBerry) support multiple platforms. There have been lots of rumours of Microsoft Office coming to those platforms, but so far we've only really seen the web version running in a browser, and a version of OneNote.
Again, because of compatibility concerns, I'm not sure anything will replace Office (and especially Excel) in the enterprise any time soon. Still, these new platforms provide the biggest threat Office has seen in years.
Michael J. Miller is Chief Information Officer at Ziff Brothers Investments, a private investment firm. Mr. Miller, who was editor-in-chief at PC Magazine from 1991-2005, authors this blog for PC Magazine to share his thoughts on PC-related products. No investment advice is offered in this blog. All duties are disclaimed. Mr. Miller works separately for a private investment firm which may at any time invest in companies whose products are discussed in this blog, and no disclosure of securities transactions will be made.