Microsoft Announces Name, Pricing for Subscription Office

As the Age of Ozzie begins at Microsoft, the pundits are already abuzz about how the Redmond-based behemoth might retool its business to more effectively compete with the likes of Google. The leading view is that Microsoft will move steadily toward a model based on "software plus services," bolstering its packaged software with value-added online services and selling the whole shebang at subscription rates.

Microsoft today announced the official name for its first such offering: Microsoft Equipt. As discussed earlier, this new package bundles Microsoft Office Home and Student Edition with Windows Live OneCare and some other Microsoft applications, including Windows Live Mail and Windows Live Messenger, all for a single monthly fee. And the fee ain't bad.

At $69.99 per year, a two-year subscription to Microsoft Equipt is still slightly less expensive than a boxed version of Office Home and Student edition, which retails for $149.95. And Equipt throws in Windows Live OneCare for free.

Extend that subscription to four years, however -- the length of time between the last two releases of Microsoft Office -- and the picture is less rosy. If you expect to be a heavy Office user throughout the life cycle of the product -- or for four years of college, for instance -- you might save a few bucks by purchasing the suite outright.

Still, one advantage of Equipt's subscription pricing model is that it builds in a certain amount of consumer protection. Office 2007 has already been on the market for a while now. If you bought a subscription to Microsoft Equipt today and Microsoft released a new edition of Office next month, you would automatically get a free upgrade to the new version as part of your subscription.

Equipt also has another interesting wrinkle that could make it particularly attractive to users who move around. Each Equipt subscription includes a license to install the Office applications on not just one, but three PCs. Retail versions of Office typically include only one license.

So, for example, you could install one copy on your workstation at the office, another on your laptop for the road, and still another on your spouse's laptop (just in case). Equipt could also be a cost-effective package for a very small office (provided you could get by on only those applications that are included in Microsoft Office Home and Student Edition).

I'm curious to see how customers react to this new offering. The software business has been changing dramatically in recent years, due in large part to pressure from open source and software-as-a-service offerings. Microsoft is clearly trying to strike a balance between its traditional packaged software model and the new services-driven paradigm. If it gets it right, we could see the beginnings of a brand-new way of procuring software. The question is: Will it cost customers more or less in the long run?

Microsoft Equipt will be available exclusively at Circuit City stores beginning July 15, with other retailers to follow.