Microsoft embraces subscription model in Office + Windows Live bundle

For years, customers have asked for an affordable subscription-based service for what has typically been perceived as Microsoft's steeply-priced software. If seventy bucks a year seems affordable enough, it's finally coming.

It could be one of Microsoft's most significant moves in the home applications market in years -- long overdue, many will say, but finally arriving. Beginning later this month, the company will offer an annual subscription package that bundles together its Office Home and Student 2007 suite with Windows Live Services, Office Live Workspace, and Windows Live OneCare, for $69.99 annually.

Currently, Windows Live OneCare -- the company's pro-active, anti-malware subscription service -- is sold at an annual subscription rate of $49.99. For twenty bucks more per year, Microsoft is throwing in a software suite whose average retail street price today is about $125, and licensing it for installation on up to three PCs.

And perhaps most astonishingly of all, Microsoft has come up with a short, sweet, self-explaining brand name for this service: Equipt. Not "Microsoft Home Office and/or Student Productivity and Safety Bundle 2008," but an actual brand that customers can remember and ask for.

The Home and Student suite comes with the basic four Office components: Word, Excel, PowerPoint, and OneNote. Outlook is not among these, but Microsoft addresses the e-mail component of the package instead with Windows Live Mail (note, not Windows Live Hotmail). This and the other Windows Live services were, of course, free anyway (Messenger, Photo Gallery, Live Writer, and Live Toolbar), though this service should drive membership for Windows Live.

Compellingly, Microsoft also adds Office Live Workspace to this package, which is the "cloud" storage feature that enables remote storage and sharing of Office documents, that's officially still in beta. The mid-month availability of Equipt suggests that this feature may come out of beta within the next few weeks. Granted, this service has also been free up to now, but just its inclusion as part of the installation routine for Equipt means it will probably see significantly greater use among high school and college students.

1:35 pm EDT July 2, 2008 - A Microsoft spokesperson did address a number of BetaNews' questions on the Equipt bundle early this afternoon. For instance, this morning's announcement only mentioned Circuit City as a retailer that would be making Equipt available in box form in mid-July for $69.99, to cover the first year's fee. Is there any exclusivity involved here, and can consumers expect to see this price for the same box available elsewhere, and at the same time?

"Circuit City is a leading Microsoft retail partner and is able to support the Microsoft Equipt launch with a highly trained retail sales force and tech bench services as well as prominent in-store marketing and merchandising," a Microsoft spokesperson told us. "Microsoft will continue to investigate additional retail partnerships to make it easy for our customers to obtain this product, and you may see us offer via OEM, direct from Microsoft, etc. So while Circuit City is the first partner retailer to offer Microsoft Equipt, they are not the exclusive provider, no."

Next, we asked if Microsoft intends to use the Windows Live Mail address of the subscriber as a way of communicating with her directly -- perhaps to notify her of upgrades or new services, for instance.

"There is no concrete policy in place yet for the upgrade notification process," Microsoft's spokesperson responded, "but we're aiming to be more thoughtful regarding notifications -- we will communicate the upgrades that are coming [and] that are available, we won't force them upon customers on a particular day in time, and we will provide instructions for them on how to obtain the upgrades."

In the enterprise market, annual volume subscribers to Windows Vista are often given exclusive features and upgrades as part of Microsoft's pledge to maximize value in exchange for customer commitments. Will a similar pledge be made for consumers through Equipt?

Evidently not. "The updates for the individual components (OneCare, Office Home and Student) would be available to the subscriber when they are available on the market, so a subscriber would not have to wait until they pass their annual subscription renewal date to receive those upgrades," we were told.

This suggests that the Home and Student edition will continue to exist as a package for sale separately, although we don't yet know whether it will be discounted to remain competitive with the subscription option.

Microsoft's spokesperson declined comment on whether the company has considered a future bundle of products such as Equipt with Windows Home Server, though it was not ruled out.