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For all the hubbub about Web-based alternatives to Microsoft Office, surely someone is using them. Uh-Oh, surely not.

In a recent survey, NPD asked nearly 600 PC users: "Have you heard about online, browser-based office productivity applications like Google Docs, Google Spreadsheets, gOffice, etc.?" NPD also asked, "If so, how often do you use them?"

Ninety-four percent of US consumers have never heard of Web-based productivity suite alternatives. A mere 0.5 percent have substituted Web-based productivity suites for desktop software like Microsoft Office. Chris Swenson, NPD's director of Software Industry Analysis, described the 0.5 percent figure as being a "bit high." Swenson predicted worldwide usage to be even lower than the United States.

The scant adoption makes some sense of Microsoft's Office Live Workspace, which went into broad beta last week. The service clearly is designed to be an adjunct to Office desktop software rather than a Web-based alternative. If NPD's numbers are indicative of real world usage, Microsoft hasn't much to worry from Google Docs and Spreadsheets, or other online alternatives. Maybe too many people make too much about the Web 2.0 threat to Office.

"The survey results show not only that SaaS [Software as a Service] firms have a long way to go to build brand awareness and trust among PC users. but it points to how powerful the Office brand still is, and how difficult it will probably be for most of these firms to dislodge huge swaths of Office users from the grips of Microsoft," Swenson said

While online Office alternative may not be the thing, other software-as-a-service categories are doing just fine, thank you. Online tax preparation is example of one successful SaaS category, Swenson said.

Another successful SaaS offering is surprising, at first glance. Through the end of September, Apple's .Mac was the second-ranked Mac OS-only software SKU, at US retail, behind Office 2004 Student and Teacher Edition, according to NPD. While .Mac is an online suite of services, Apple sells a license number in a box at retail.

"Because the physical box exists, Apple retail staff can put it on top of the MacBook someone's buying," Swenson said. The service costs $99 a year, but Apple chops $30 off the price when purchased with a new Mac. "The Apple Genius can sell .Mac to someone who's had a hard drive failure, and, of course, someone could wander in off the street, discover the product and buy it," Swenson added.

If not for the boxed retail SKU, "I think volumes for .Mac would no doubt be a lot lower," Swenson emphasized.

Apple's .Mac success is a reasonable alternative for some SaaS providers to follow, even those offering Web-based productivity suites. NPD's survey shows that typical viral marketing campaigns won't be enough for Web-based productivity upstarts to even modestly displace Office.

"There are still a lot of consumers that discover their software products by browsing store shelves, or getting a recommendation from a store clerk," Swenson said. "Between 10 percent to 30 percent of consumers that buy software discover new software products this way. If you're not going to advertise, it might pay to figure out a way to get your consumer SaaS product into the retail channel."

Swenson said that he couldn't over-emphasize the importance of retail shelf space, even for software services, like tax preparation. If H&R Block and Intuit "didn't have great fat-client software products to sell, I'd recommend that they put their SaaS apps in a box and push them in retail, too," he said. "Maybe this is a strategy for some of the smaller online Tax prep companies that are trying to take on Intuit and H&R Block."

 http://www.microsoft-watch.com/content/web_services_browser/rip_the_web_20_office_suite.html?kc=MWRSS02129TX1K0000535