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MS Office was something new when it was launched.


Before MS Office, the market-leading apps in each sector tended to be from different vendors. E.g. in the late MS-DOS era, the leading apps were:



  • Spreadsheet: Lotus 1–2–3

  • Word processor: WordPerfect

  • Database: Ashton-Tate dBase IV

  • Presentation program: Harvard Graphics


The shift to Windows allows MS to get the upper hand and have competitive apps in all these sectors. To understand this you must understand that the plan was that MS-DOS would be replaced by OS/2, co-written by Microsoft with IBM. Big vendors such as Lotus and WordPerfect put a lot of effort into new OS/2 versions.


But OS/2 flopped, because at IBM’s insistence, OS/2 1.x ran on the 16-bit 80286 CPU. The 286 could not effectively multitask DOS apps, and as a result, neither could OS/2 1.x — or even offer very good DOS compatibility. This needed the 32-bit 80386 CPU — the origin of the name “x86”.


When OS/2 1.x flopped, Microsoft made a last-ditch effort to revive its failed Windows product on top of DOS. Windows 3 was a surprise hit. MS was not expecting it — when Windows 3 came out, the only major app Microsoft offered for its own GUI was Excel, which had been ported from the Mac to Windows 2. 


But MS pivoted quickly, hastily wrote a wordprocessor for Windows — Word for Windows 1 — and ported its Mac presentation program Powerpoint to Windows.



Suddenly it has a good spreadsheet and a reasonable presentations app, and a wordprocessor that wasn’t great but would do. They weren’t super-competitive but good enough. 


So, to promote them, it bundled them together as MS Office — see:


Liam Proven's answer to How did Microsoft choose the name “Office” for its suite of productivity tools?


MS Office was much cheaper than buying such apps individually. 


Before this, there were several “integrated apps” — single programs that contained a basic word-processor, a basic spreadsheet, a basic business graphing program and a basic database.


Examples:



These were not really separate apps. They were single programs with different modes that looked like a word-processor, a spreadsheet and a database, for instance.


Similarly, some spreadsheets grew additional functionality:



Basically, MS Works grew out of the tradition of integrated programs. It was a single app with different modes.


MS Office grew out of the tradition of expensive stand-alone flagship business programs, bundled together as a promotion. Other examples:



The main competition to MS Office today is arguably LibreOffice. It is the leading FOSS productivity suite, developed out of OpenOffice, which was the FOSS version of StarOffice. Before it was purchased by Sun, StarDivision developed StarOffice out of its word-processor StarWriter. It is still one program with different modes even today, so ironically, LibreOffice is architecturally the descendant of the integrated-app family, rather than being a true suite.


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