Microsoft Annual

Posted on July 2, 2008

Microsoft will begin selling its Office programs to consumers on a subscription basis starting sometime July, in a bid to reach buyers who would otherwise pass on buying productivity software and instead struggle along with whatever the manufacturer put on their computer, if anything at all. Usually it would be something like WordPerfect or Microsoft Works.

This move may also be the lead-in to sell software services over the web. They really need to be moving along in that pursuit before they lose too much ground to Google Docs, Zoho, and ThinkFree.

As an added kicker, the software will be bundled with Microsoft’s Live OneCare computer security software and will be sold at nearly 700 Circuit City stores for $70 per year. It’s not going to be an exclusive deal with CC and will be available in the future at other retailers like Dell.

Buying those programs the traditional way would cost about $200, and then consumers who wanted to replace the software with the next version, would have to pay full price, whereas under the subscription model, upgrades are included in the annual cost.

Microsoft is making an interesting move including OneCare in the package. For one thing, it’s been out awhile and hasn’t really made much of a showing. That’s due primarily to the near lock that Norton and McAfee have on the security market. It is quite a good product and deserves better than it’s getting.

Users have shown willingness to pay $50-$70 for a security package so pricing a package that includes OneCare in that price range is almost like getting Office for nothing. There’s one obvious problem, of course. Those who have already upped the bucks for Norton, for example, have no incentive to purchase at least until their current year’s subscription is up. Unless unhappy with their security product, most will re-up whether it be McAfee or Norton, so the package has to appeal to someone who really wants Office or who hasn’t yet purchased a security package of some kind.

If a user tries to figure the value of the security suite which he doesn’t want/need, he’s left looking at an Office package which he then values at $70 minus the value of OneCare and may conclude he’s paying $70 for a $20 product and decide it’s too expensive.

Time will tell…