Microsoft to Release Office as a Service in Mid-July

Microsoft (Nasdaq: MSFT) on Wednesday took the wrapper off its new subscription service, formerly code-named "Albany." The company had previously been operating a beta version of the service.

The service, Microsoft Equipt, combines applications from the software maker's Office productivity suite and its Live OneCare, an all-in-one security and PC management service, as well as several applications from Windows Live.

Priced at US$69.99 for a one-year, renewable subscription, the service will be available at Circuit City (NYSE: CC), the first of several possible retail outlets, starting in mid-July.

Secure Productivity

Microsoft Equipt will feature Microsoft Office Home and Student 2007, which includes the latest versions of Word 2007, Excel 2007, PowerPoint 2007 and OneNote 2007. The software maker has also thrown in several other applications through its Office Live Workspace, as well as Windows Live Mail, Windows Live Messenger, Windows Live Writer and Windows Photo Gallery.

One of Equipt's biggest components, however is Windows Live OneCare. With the security and performance software, consumers will have an antivirus and antispyware offering that also comes with firewall protection, file and photo backup, performance tune-ups and home network management tools.

The subscription, which can be installed on up to three computers, includes regular security updates.

Entry Point

The purpose of Microsoft Equipt is to accustom consumers to thinking of Office in a new light rather than as a traditional out-of-the-box application, said Michael Silver, a Gartner (NYSE: IT) analyst.

"The goal would be to use a product that people already see as a subscription product -- security -- to get people used to seeing Office as a subscription service. It's a pretty interesting experiment," he told TechNewsWorld.

While there are other online productivity products such as Google Docs and OpenOffice -- neither of which require subscription fees -- the functionality of Microsoft's Office suite is "way different, and the other office products don't include the security function, either," Silver continued.

Rather than changing perceptions about Microsoft Office, the bundled productivity and security offering is an effort to increase the number of OneCare users, Matt Rosoff, an analyst at Directions on Microsoft, told TechNewsWorld.

"Equipt is mainly an attempt to drive more adoption of OneCare. If you look at high-end consumer security products, like Norton 360 and McAfee Total Protection, those cost $80 per year. While OneCare may not be as sophisticated as those products, those vendors have nothing to compete against Office. I don't think most consumers compare the Office subscription versus Office one-time -- I think they'll compare Equipt versus security-only subscription products. In that case, Equipt looks like a solid bargain," he explained.

While Equipt's lower entry price for Office -- which starts at $149 for the most basic non-subscription version -- might attract some consumers, in the long run Equipt users will shell out more, Rosoff pointed out. That, however, is tempered by the fact that they will have rights to perpetual upgrades, he added.

"It probably balances out as long as Microsoft keeps releasing new versions of Office every three years, and those versions offer significant value compared with the previous version," Rosoff said.

Competition Buster

Equipt could also heat up competition between Microsoft and other security vendors. However, Rosoff said he doubts that the product is aimed at Google Apps or OpenOffice.

"Microsoft has been clearly competing against McAfee, Symantec (Nasdaq: SYMC) and other vendors ever since it started shipping OneCare a couple years ago. Equipt could impact these vendors, given that it bundles a popular product with proven demand -- Office -- with OneCare. Microsoft might eventually feel some price pressure on Office from [Google Apps or OpenOffice]," he noted.

"That said, Equipt will initially be sold only through retail outlets. ... Most PCs from major [original equipment manufacturers] come bundled with a free trial of other security software, so many consumers will probably just use the security suite that shipped with their new PC, and perhaps buy standalone Office separately," he concluded.