Same exact thing happened to me, and my house was built five years ago. The builder didn't caulk between the jamb and sill, so water got all in there and rotted just like your picture. Right side was the worst too. I'll bet there is some rot on the left side, but it's just not visible from the outside.
I highly suggest simply replacing the entire thing with a door with a fiberglass/PVC frame. I replaced mine with a pre-hung Masonite fiberglass door (with window) with their DuraPlast composite frame for ~$500 delivered and my dad and I installed it in half a day. This door should last the lifetime of the house as there's nothing that will rot. I would never go with a wood-frame exterior door again unless it was protected by a portico or screen door, but even then the DuraPlast frame didn't add any cost so why chance it? I caulked everything with silicone. Water doesn't stand a chance!
Before buying the new door, I tried repairing the rot using PC Woody's Wood Rot Repair Kit, which is awesome stuff, but I only repaired the bottom of the door before giving up. There was just too much rot in the frame that the only way to fix it was to splice in the bottom 6" on both sides with new wood/PVC. At that point, you really need to get all of the rot out and even if you do a good job of splicing a new bottom in, there's the inevitable chance it could happen again. $500 now vs. $500 and more headache later. You'll want to make sure the rot doesn't extend all the way into the framing.