Microsoft Tries Annual Fee in New Office Bundle

A lower-cost, subscription-based Office bundle may be less of an effort to undermine Google Apps and more about promoting Microsoft's OneCare antivirus service.

Stuart J. Johnston
In a bid to drive new subscription-based revenue from consumers, Microsoft plans to begin selling a subscription service for the home and student edition of its Office productivity suite, starting in mid-July.
With its $69.99 annual subscription fee, the new Microsoft Equipt bundle may appear like a swipe at software-as-a-service (SaaS) offerings, which are delivered over the Web, and for which users similarly pay subscription fees.
But rather than getting its feet a little more damp in SaaS -- an area where it's thus far been reluctant to wade too deeply -- Microsoft (NASDAQ: MSFT) has other aims with Equipt.
The package includes Office Home and Student 2007 -- which typically retails for $149.95 -- as well as a subscription to the company's OneCare malware protection service, which by itself costs $49.95 per year. Unlike SaaS offerings like Google Apps, however, the version of Office is traditional, packaged software that users install on their hard drives.
As a result, one analyst sees Microsoft sticking to its guns by retaining Office as pure software. Instead, it's OneCare that is Equipt's core focus, Matt Rosoff, consumer affairs analyst at Directions on Microsoft, told InternetNews.com.
"It looks like they are trying to spur adoption of OneCare by bundling it with Office," Rosoff said. "I can get a security product from someone like Symantec for $80 per year or I can get it with Office."
The idea is to lure customers in with a deeply discounted, packaged version of Office as a loss leader while enlisting new subscribers to OneCare's anti-malware and antivirus subscription service.
"With Microsoft Equipt, we're improving our customers' computing experience by giving them essential software in a package that offers an easy install and setup experience, as well as a convenient and affordable way to stay updated with the latest versions of Office and Windows Live OneCare," Bryson Gordon, group product manager for Office, said in a statement.
In addition to Office and OneCare, the subscription provides free updates to the Office suite -- which includes Word 2007, Excel 2007, PowerPoint 2007 and OneNote 2007-- as long as users continue to pay the annual fee. Users also will be able to install software on up to three PCs.
Equipt includes several already-free Microsoft Windows Live services, including Live Mail, Live Messenger and Live Photo Gallery.
It's not yet clear whether home and educational users will gravitate toward the offering, when it goes on sale later this month, in outlets that include 700 Circuit City stores in the U.S. The cost savings is likely to have at least some appeal, Rosoff said.
"It's a pretty good value," he added.
Microsoft first announced Equipt, then codenamed Albany, in mid-April.
Even though the offering isn't targeting SaaS-based rivals like Google (NASDAQ: GOOG) Docs, Zoho Office Suite, OpenOffice.org and Sun StarOffice, that doesn't mean that Microsoft is staying away from SaaS.
For instance, the company has shown some willingness to explore hosting enterprise applications for businesses -- such as its Dynamics CRM Online offering, which went live in April.
Additionally, application virtualization firm Endeavors Technologies in May said the software giant plans to roll out upcoming software licensing changes that would let companies stream Office applications to users' desktops.
Microsoft has yet to announce such a plan publicly, even though rumors had previously suggested a June date for its unveiling.