Microsoft is nearing a critical time in its history. Both Vista – the next version of Windows – and Office 2007 are being billed as the biggest releases in their product categories for at least a decade. Both products have much to live up to, and it is not exaggerating much to suggest that the most serious competition to the forthcoming releases will be the existing versions of Windows and Office.

Many firms have only recently completed a transition to Windows XP, which has been around long enough to have proven itself as a stable and reliable platform, if you can overlook the occasional security hole. Similarly, most companies are more than happy with the capabilities of Office 2003, and many have seen little reason to move from Office XP or even Office 2000.

Microsoft is understandably keen to get as many customers as possible to upgrade, once the new software becomes available. Most companies with Windows desktop systems will stick with their version of the operating system until their next hardware refresh cycle, but what about Office?

Microsoft has been putting a great deal of effort into new collaboration features in Office 2007 to tempt wavering customers. Much of this concerns SharePoint Server 2007, a product that is part of Microsoft’s Office 2007 “system”, but which isn’t actually included with any of the Office editions and must be purchased separately.

Microsoft has now unveiled plans to turn Office applications into the front-end through which staff interact with enterprise applications such as customer relationship management (CRM) and enterprise resource planning (ERP) systems. In some ways this is an attractive proposition. Most companies already run Office applications, and staff are familiar with its user interface. By contrast, many enterprise applications can be difficult to operate.

But before taking this route, firms should consider just how dependant they will be on Microsoft technology. Readers probably already run Windows desktops connected to Windows servers, and quite possibly have a Microsoft Exchange email system serving up messages to users running Outlook.

If your firm in future makes full use of the new collaboration features of Office, builds transactional applications around SharePoint Server 2007 Line-of-Business Interoperability (Lobi), and ties back-end systems into Office applications, you will end up with almost the entire company infrastructure based on Microsoft products.

It worries me how much monopoly power Microsoft will have when mission-critical applications everywhere are largely accessed through its software. Perhaps Bill Gates has chosen to announce his departure as chief software architect now because he thinks there will be little more for him to do in future.