Office Suite: Microsoft loves to talk about...

Office Suite: Microsoft loves to talk about its plans for the rapidly growing Internet. But when it comes to profit, Microsoft still depends heavily on more mundane products like Office.

Today at Comdex, Microsoft Chairman Bill Gates is expected to announce Office 97, the latest version of the company’s popular suite of word-processing, spreadsheet and other productivity software.

With an installed base of 25 million users potentially interested in upgrading to the new version, Microsoft is billing the release as its second-most important product introduction in its history, behind Windows 95.

How well Office 97 performs in the market could well be critical in determining whether Microsoft can continue to justify the sky-high multiples at which its stock has been trading.

“Office is the cash cow that drives Microsoft,” says Chris LeTocq, analyst at San Jose-based Dataquest.

The product has some nifty features. You can click on an icon of a pencil and hand draw a graph, for example, a task that many users otherwise find confounding. And the software has a new feature called IntelliSense that makes intelligent guesses about what the user is trying to do and offers help.

The new software also allows several people at different sites to work together on a single spreadsheet. And it includes extensive Internet features that allow users to, for example, write documents that include hyperlinks to other documents on the Net or within a corporation’s intranet.

Although the product is getting good reviews in the trade press, it has one major shortcoming: It’s available only on Windows 95 and Windows NT. And many users may resist upgrading for comparatively modest, incremental improvements.