Microsoft Office has some new competition. Jyoti Banerjee checks out the new kid on the block.
Stop getting excited. This has nothing to do with Office 2.0 or SaaS or open source or anything. The new competitor to Microsoft's cash cow comes from, well, a grocer.
Admittedly, this is not your garden-variety grocer. It's Tesco, a company that takes in £1 out of every £8 spent in UK high street stores, has seen off Sainsbury's for the top spot in the UK, is comfortably placed in fending off the attentions of Asda / Wal-mart, and has even decided to start its US operations with the first stores opening on the west coast in 2007. International sales in the first half of 2006 represented £5.3 billion, boosting the group's revenues to £22.6 billion. I say it again - these are just half year sales figures.
It is also true to say that in e-commerce terms, there is none bigger in the UK. Tesco.com is a billion pound company in its own right. I should also admit that it is a bit unfair to call Tesco a grocer, as 20% of sales come from non-food stuff (excluding petrol), and Terry Leahy's management team have a clear strategy to make non-food as big as food.
Personal aside: I do my best to avoid my local Tesco. There's nothing wrong with the stuff it sells. The prices are great. And everything is always in stock - hint, hint, Sainsbury's. It's just that the lines at the check-out counters are so long, I can't be bothered to wait.
What, I can hear you asking, has this got to do with Microsoft? Tesco sells computers alongside the cabbages. So what?
Tesco has decided to sell its own software. Initially, there will be six packages: an office suite; two security / antivirus products; a personal finance tool; a CD/DVD burning tool and a photo editing tool. Each will be priced at £20, or about one-fifteenth the typical street price of MS Office, for example. As Tesco itself recognises, it is only intending to take on Microsoft, Symantec, Adobe and McAfee altogether at the same time. You and I might baulk at this approach but then neither you or I are Tesco.
Will the products be any good? Well, the products are white-labelled from Formjet, an AIM-listed minnow in the software world. Actually, I am not bothered about the software's capability.
As long as the products work, I suspect Tesco will sell a bundle.
My case study in point is Sage. In its early years, Sage was nothing more than a smart marketing operation that happened to sell some software. The effort was devoted to sales, not research and development. I remember being shown around Sage's then new offices in Newcastle by co-founder Graham Wylie all those years ago. The sales room stretched as far as the eye could see, but the R&D team squashed into a room hardly bigger than my bedroom. Of course, times have changed at Sage now but the lesson was simple: great marketing counts for a lot, even if the product is indifferent.
You don't get a better marketing outfit than Tesco. Already, they have made a Tesco-sized mark in financial services, CDs, electronics, clothing, housewares, computers, telecoms and fuel. They have direct access to the customer. If anybody can, Tesco can.
How should Microsoft, Symantec and Co view this new entrant? Well, I would rather not speak for them. But I can tell you that the value proposition from Tesco will sharpen competition, lower prices, and force the current top dogs to deliver more value through innovation. 
Tesco will be aiming for the laggard buyer who is not seeking smart new features but wants value above all else. For these buyers, the new trends of software-as-a service from the likes of Google may be too complicated, and the offerings from Microsoft too expensive. They'll buy a Chinese no-name electronics item because Tesco sells them cheap. And they'll take some software home with the meat, milk and veg.
And yet more Tesco tills will go ker-ching.
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