Software Notebook: Microsoft cashes in on Mac

At the Macworld Expo in San Francisco last week, Roz Ho, the general manager of Microsoft's Mac Business Unit, told the audience that 2005 was the best year on record for its business. The unit makes Word, Excel and other Office programs for the Mac.

Sales of Microsoft Office are connected in part to sales of new Macs, because many people who buy new computers buy new versions of Office at the same time. In that way, the record year for Microsoft's Mac Business Unit can be traced in part to an increase in Mac sales. Apple said Mac shipments rose 38 percent in its most recent fiscal year.

Ho's statement at Macworld "was a great indication of the health of their Macintosh business, which obviously is a reflection on the popularity of our computers," Dave Russell, senior director of Apple's portable and wireless business, said during an interview at Macworld.

In turn, one of the reasons widely cited for the increase in Mac sales is the iPod's popularity. People who use Apple's music player have started taking a more serious look at Apple's computers, in what's commonly known as the iPod halo effect.

By extension, the iPod's positive effect on Mac sales now appears to be helping Microsoft's Mac software business, as well.

Microsoft doesn't release specific sales figures for Office for Mac, but it has given hints.

Last spring, Microsoft said in a regulatory filing that quarterly revenue in its consumer hardware, consumer software and related businesses increased $21 million, or 10 percent, compared with the same quarter the previous year. That was "primarily due to strength in Mac Office," the company said in the filing.

"I've said many times that Mac Office is an incredibly successful product," Ho told the Macworld audience last week.

During the conference, Microsoft and Apple announced an agreement that commits Microsoft to keep making Office for Mac for at least five more years.

But despite the roundabout benefit from the iPod, don't look for Microsoft and its hardware partners to drop their separate battle against Apple's device anytime soon. Even with its success, the 180-person Mac Business Unit remains a small portion of Microsoft's overall business.

COMPETITIVE POSITIONING: Microsoft's Peter Moore, the executive in charge of the Xbox unit, says he knows what he would have done to try to counteract the recent Xbox 360 launch if he were in rival Sony's shoes.

In a recent interview at the Consumer Electronics Show in Las Vegas, Moore said he was surprised that Sony didn't launch a campaign to tout features that would connect its PlayStation Portable, currently on the market, to the PlayStation 3 console, which is due out later this year.

Moore said such a move could have made a PlayStation Portable owner more willing to wait for the PlayStation 3. "There are ways that you need to be able to drive that linkage in the consumer's mind," he said.

If Sony is concerned about the Xbox 360's head start, it's not saying so publicly. Kaz Hirai, Sony Computer Entertainment America president, told an audience at the Consumer Electronics Show that Sony believes the next console generation "doesn't really start until we launch it."

Sony's PlayStation 2 dominates the current console generation, with more than 100 million units sold worldwide since its launch nearly six years ago.

Moore also doesn't lack for confidence in the Xbox 360's prospects. Asked why he felt comfortable now talking openly about what he would do if he were Sony, he cited Microsoft's progress in launching and building buzz around the Xbox 360.

"I think it's too late," he said.

REUSABLE RESOURCES: Ah, the advantages of owning multiple media assets.

The upcoming version of Microsoft's Flight Simulator game will take advantage of improvements in the Windows operating system to offer a much more realistic experience, such as letting pilots track the course of real shipping routes. There will also be animals on the ground as people fly through the game.

But rather than build those animals from scratch, Flight Simulator's developers are turning to some that already exist, said Michael Gilbert, Microsoft Flight Simulator program manager.

Making guest appearances in the version of Flight Simulator will be the animals from another Microsoft game, Zoo Tycoon.

Software Notebook is a Monday feature by P-I reporter Todd Bishop. He can be reached at 206-448-8221 or toddbishop@seattlepi.com.

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