Microsoft already sells OneCare in the form of annual subscriptions, but it represents the first time it will sell Office that way.
This seems like a useful experiment, but dreadfully late. And I’m not sure it confronts the major questions of value in the marketplace. Consumers are used to getting so much free these days that I wonder what they will be willing to pay for.
Microsoft won’t answer the biggest question about the bundle: how much it will cost? So let’s think about the options.
Right now OneCare has a list price of $50 a year, and Microsoft Office Home and Student lists for $150 in the version you can use forever. (Amazon is currently selling a one-year OneCare subscription for $30 and the home Office version for $120.)
The Microsoft news release also says that Albany also includes Microsoft Live Mail, Messenger and Photo Gallery, services that are already free. (Am I the only one who gets annoyed when companies breathlessly tell me they are giving me something that they had already been giving me? It’s almost as annoying as a company offering a service, but not saying how much it will cost.)
In any case, how much would this package be worth? Assume that Microsoft upgrades Office every three years. So for people who wanted the most up-to-date version, the list price of $150 for the home edition of Office would come to $50 a year. So the combination of Office and OneCare, at $50 a year, assuming you wanted it, would bring the price to $100 a year, list, or $80 a year, based on the Amazon discounts.
Since typically you pay more for things on a month-to-month basis than if you pay all at once, that might imply a fair price of $10 or $12 a month for the Microsoft bundle. Microsoft could try to throw in some other features and raise the monthly price to $15, but I suspect that won’t work. The “Ultimate extras” that are bundled with Windows Vista Ultimate, for example, have underwhelmed even the biggest Microsoft fans.
On the other hand, Microsoft could get aggressive and charge say, $80 or $90 for a one-year subscription ($6.66 or $7.50 a month). I suspect that would be a smart move. Over the next few years, Microsoft has to be prepared for the potential that Google’s free Web-based applications will be very competitive in the home market. So getting customers used to the idea of paying something, but not much, for Microsoft software may wise.
More interesting, of course, would be if Microsoft found a way to offer a version free with advertising. That wouldn’t be for everyone, but it is a fine option. One hint that Microsoft is thinking in that direction is the fact the Albany package will include a “Microsoft Office toolbar, so users can save documents to their own dedicated online workspace and invite friends and classmates to collaborate and share.” Whatever features they may promote, toolbars are really about one thing: Getting users to use a certain search service.
If Microsoft can get people who take its bundle to switch from Google to Live search, it may well be worth giving away the home version of Office.