While I hate to see any company struggle with earnings, I think this should be a message to Microsoft and other companies that they need to start working a little harder on innovation and maybe a little less on cool animations and ‘gloss’.

Office 2003 appears to be falling behind in targeted sales for this point in the product’s lifecycle, according to Microsoft’s own internal figures and guidelines. Just 15% of PCs are running Office 2003, two years into its life, with Office 12 - the next edition of Microsoft’s ubiquitous suite - now on the horizon. However, Microsoft traditionally expects between 50% and two thirds of customers to be running the previous version of Office when the new copy ships.

During a recent press roundtable Chris Capossela, vice president for Microsoft’s Information Worker product management group said that Microsoft is holding firm on these numbers, and expects two thirds of the 400m Office installation base will be running Office 2003 at the time when Office 12 ships.

That means an awful lot of sales, marketing and product development work by partners during the next 18 months, in order for Microsoft to hit those figures. [Read the rest]