Microsoft Giving Office Away

I saw a blog on cnet about Microsoft's plan to give a way a "stripped down" version of Word and Excel. Microsoft is already working on a free web based version of office - I assume as a reaction to Open Office. Now they are talking about "Office Starter" being shipped (given away) with Windows. A "soft" upgrade can be purchased, and the article makes a big deal about how it's more or less like a gift card: small, simple, and useless until it's activated, so they can stock them near the checkout and anywhere else it's convenient without having to tie up much space or risk losing valuable equipment or media.

This probably sounds more radical than it really is. Microsoft makes most of it's money out of Windows and Office, so there is some risk of losing Office revenue if they start shipping free versions. As cnet points out, most of the money for Office comes from corporate customers, and these customers will be largely resistant to a stripped down version of the office tools for free. Corporations often already figure in the cost of the Office app (or it's equivalent) before buying. Microsoft will lose some corporate customers over the next few years, but most of those will be lost to Open Office and other competitors pretty much no matter what Microsoft does.

Most consumers and home users currently do not use Office. Providing a free but somehow limited copy could increase the value and utility of Windows, so it may help one of their biggest revenue sources. A free version with every copy of Windows also may remove some of the incentive for users to try Open Office - if Office is already installed (and free) then there's not much reason to go to Open Office, or so Microsoft hopes.

It feels to me like one of Microsoft's cash cows is under pressure and MS has realized that they need to change the competitive situation vs. Open Office. Now we get to find out - over the next few years - if the strategy works to hold onto the market even as things are changing radically.