Business Impact

Microsoft to sell Office, OneCare for $70 a year

SEATTLE (AP) _ Microsoft Corp. will begin selling its Office programs to consumers on a subscription basis starting mid-July, in a bid to reach thrifty PC buyers who would otherwise pass on productivity software.

The software bundle, which also includes Microsoft’s Live OneCare computer security software, will be sold at nearly 700 Circuit City stores for $70 per year.

Bryson Gordon, a group product manager for the Office group, said in an interview that the agreement with Circuit City Stores Inc. is not exclusive, and that the bundle will be available at other retailers and on PCs sold by the likes of Dell Inc. in the future.

Subscription pricing for software has become commonplace in businesses but is a relatively new concept for consumers. The Microsoft Equipt bundle – formerly code-named “Albany” – includes Word, Excel, PowerPoint and OneNote, plus OneCare and a handful of existing free Windows Live applications.

Buying those programs the traditional way would cost about $200; consumers who want to replace Office 2007 with “Office 14,” rumored to be set for a 2009 release, would have to pay full price.

Under the subscription model, upgrading to a new version is included in the annual cost.

Gordon said Equipt is aimed at people who wouldn’t ordinarily buy Office at the same time they purchase a new computer. Instead, they’d repurpose their old Office disks or pirate a friend’s copy, he said.

But those same folks are willing to spend extra on security software, Gordon said, and that’s why Equipt’s $70 price tag falls between the high and low end of popular security programs from vendors such as McAfee Inc. and Symantec Corp.

Office is a well-established cash cow for Microsoft, but the relatively new OneCare software has been slow to catch on, said Matt Rosoff, an analyst for the independent research group Directions on Microsoft. If this model succeeds – and Rosoff gives it good odds given the low price tag – that might change.

But Gordon said Microsoft’s focus is on increasing paid users for Office. Any boost to OneCare’s market share would be a side effect, albeit a pleasant one.

Equipt can be installed on up to three computers, as can the traditional packaged version of Office Home and Student 2007. Small updates to the subscription version will be made automatically, much as regular Office updates are currently, but consumers will have some control over the timing of major upgrades to new versions.

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