By Andy McCue, 4 October 2006 09:10
NEWS
Tesco is set to go head-to-head with the likes of Microsoft and Symantec later this month, when it starts selling its own-brand consumer office and antivirus PC software both in-store and online at less than £20 a go.
The new Tesco-branded software line is part of the supermarket giant's plans to grow its non-food business to the size of its groceries empire, and with bumper half-year profits of £1.1bn announced this week the company's dominance of the UK retail market looks set to continue, with more than £1 in every £8 spent in UK stores being at Tesco.
The software range will cover six products - an office suite, two security and antivirus packages, a personal finance tool, a CD/DVD-burning app and a photo editing tool. The products have been developed for Tesco by Formjet innovations, using technology licensed from Ability, Filestream, Panda Software and Software Dialog.
Tesco buyer Daniel Cook said the company's own-brand software is "bringing choice and value to a market that has offered little of either for too long".
Tesco is also pitching its £20 Office suite directly against Microsoft Office, which currently sells for about £300, and not the more basic Works package that comes bundled with most new Windows PCs.
George O'Reilly, director at Formjet's white-labelling division, told silicon.com office PC software doesn't need to be as expensive as Microsoft's version.
He said: "The Tesco office package functionality is massive with things like mail merger, macros, grammar check and thesaurus. It's a huge feature set. We kept out stuff people just don't need like voice recognition."
Customers will also be able to access technology and customer support via a new TescoSoftware.com website.
O'Reilly said that while the products will initially be sold individually off-the-shelf, Tesco is looking at bundling it with the computer hardware it also sells in the future.
Microsoft's response to the Tesco announcement was typically bullish. A spokeswoman told silicon.com: "Microsoft welcomes competition in all its markets, because it drives innovation and keeps prices competitive - both of which benefit our customers and our reseller channel."
A Symantec spokeswoman said the company welcomes "healthy competition" in the antivirus software market.
But what of Tesco's chances of success against the might of Redmond? David Mitchell, analyst at Ovum said that marketing and not price, quality or ease of use is the key reason why some software products gain dominance over others.
He said: "It is the power of the marketing machine in Microsoft that has brought it to its current position in the market. It is a testament to the confidence of the Tesco marketing organisation that they are entering this market in this way."
Mitchell acknowledged Tesco has a track record of breaking into markets that are supposedly staid and impenetrable but he warned its latest software venture could turn out to be a "damp squib" if the company fails to take into account the disruption in the software industry with trends such as software as a service.
He said: "Partnering with a category minnow demonstrates one of two things. Either that Tesco is confident that its marketing engine is robust enough to develop their brand and the business behind it, or that it has not properly understood the dynamics of the market it is entering."
Comments
There are 12 comments. Join the discussion
1. anonymous
Nothing is sacred to the mighty Tesco brand.
I hear their next big venture is Politics.
We'll soon be changing Royalty for Loyalty (card) and renaming England to Tescoland.
(hmmmmm, I wonder if that will be before or after the Tesco climate change promotion?)
2. Steve Berry
Yawn......
Who are they trying to kid ??
Point - MS *own* everything they sell which gives them carte blanche to do with their software as they see fit. Ref: the recent "moaning" by McAfee/Symantec et all.. concerning Vista lockdown.
Tesco don't "own" a damn thing - they're just settng up business deals with various smallish suppliers.
Then again - there's always the economies of scale issue when your target market is aiming for those that really don't know any better/don't care.
Here today...gone tomorrow.
3. Pok Wu
Good for Tesco, but I fear its chances of success are negligible unless it is totally compatible with MS Office - something that nobody else has managed yet because of the Evil Empire's stranglehold on the market. However, let's all go out and support them - who knows, they might make it work!!
4. Dave Cotton
The office suite will save it's documents in what format?
It will be able to read and write MS formats?
Openoffice is free and can do that.
5. John Bend
Yes, but try buying a large loaf of wholemeal bread and a tin of pilchards in tomato sauce.
Tesco really need to review their core business. Like many folk in the Bucks area I am tired of empty shelves in our Tesco superstores - even own brands. The quality of Tesco fruit and vedge is now an all time low. My wife and I now choose to shop more at the local market and other stores.
6. Trevor Eddolls
Why don't they go the whole way and sell PCs with Linux installed instead of memory-hungry Windows?
Their gambit is probably doomed to failure because if people want very cheap alternatives to Microsoft and the user-unfriendly Norton anti-virus they will be able to get Writely etc for free from Google very soon.
7. Pok Wu
Good for Tesco, but I fear its chances of success are negligible unless it is totally compatible with MS Office - something that nobody else has managed yet because of the Evil Empire's stranglehold on the market. However, let's all go out and support them - who knows, they might make it work!!
8. anonymous
It astonishes me that any company thinks it could help reduce the stranglehold held by Microsoft or as I suspect make some profit from providing a couple of low cost applications will ever succeed when there are many FREE to use operating systems and applications out there already
For example, my preferred workstation operating system is UBUNTU which is a self installing operating system which comes with Open Office by default, which by the way also reads and writes Microsoft office files
I send a number of “old” PCs every year to Africa, fully loaded with this extremely reliable operating system (UBUNTU) simply because of its reliability and is completely free of all software charges and licensing costs. The applications included in the basic UBUNTU operating system include the popular Open Office suite along with many built in applications for media and graphics manipulation and in my view that communications capability is second to none
There are other systems available out there and a close rival to UBUNTU is the FREESPIRE operating system but real hurdle is to guide end users away from proprietary code. Open source is the ONLY sustainable way forward as it is not geared to any of the restrictions from power, politics or religion
Dr John L Dimmock - Technical Director
Media Services Sussex Ltd
Metroweb Network Services
First Internet UK Ltd
MetroCell Ltd
http://media-services.co.uk
9. Rob
I agree with John from Bucks, since all this divergence from Tesco, the core business is suffering badly.
Quality of food products and services such as Home Delivery have declined to the point of considering using a different brand to food shop with.
A large part of the reason for using Tesco is I fill up with fuel there in an attempt to recoup some money through the clubcard points discounting my monthly shop. Similiar schemes exsist, prehaps Tesco is getting a bit too big for it's boots.
10. N.Brooks
Good Luck to Tescos-they have succeeded in becoming the benchmark its competitors strive to replicate-maybe this will be the kick up the a**e Microsoft needs to realise its products are too complex and way too expensive.I hope on the other hand their software is compatable with Microsoft or it will be a long time before consumers migrate to their applications.
11. Sid Cullum
Ability Office is already compatible with Microsoft Office and a great product. All we want now is every company in the UK to adopt the Tesco software.
12. anonymous
What about OpenOffice, FireFox/Thunderbird, AVG Free etc.? All for nowt!