Microsoft to replace Works with ad-supported 'Office Starter 2010'

In a bold new experiment for distributing Office that, quite surprisingly, does not involve Office Web Apps, Microsoft announced this afternoon its plans to let OEMs pre-install the full Office 2010 on new PCs, but enable it to run in a limited format until users purchase their licenses. That format, for the first time, will be ad-supported.

When Office 2010 premieres (the official date is still unknown at this point), a Microsoft spokesperson confirmed to Betanews, new Windows 7 PCs will be made available through participating OEMs (no list has been revealed yet) that contain, pre-installed, a product that will be known as Office Starter 2010. It will contain partly functional versions of Word and Excel -- or perhaps more accurately, it will appear to contain partly functional versions, because the complete Office 2010 software will be installed on these systems.

Rather than sell upgrade software separately, however, Microsoft will enable retail outlets to sell simple plastic cards containing license numbers, for the various consumer SKUs of Office including Home and Student, and Professional. Customers can enter the numbers from these cards to instantly "upgrade" their software from partly-functional, ad-supported mode to fully-functional, ad-free mode, as well as activate components that were not functional in Starter such as PowerPoint and Outlook.

This will be Microsoft's first venture into the realm of ad-supported commercial local software. Earlier, the company had considered introducing Office Web Apps, at some level, as the replacement for Microsoft Works, the long-extended entry-level software that relatively few people are aware still existed. But conceivably, Starter Edition could give Microsoft a way to more effectively monetize its entry-level software, subsidizing it continually through advertising rather than once only through OEMs. Whether OEMs will even be charged to pre-install Office Starter is doubtful; it's feasible that they may even be given incentives to do so.

However, this may still be seen as a setback for the premiere of Office Web Apps, which up until today was being described as the entry level of Office. More and more, Web Apps is looking like a way for mobile users to obtain and freshen their Microsoft Office documents on the go, which could make the suite less competitive against Google Apps, Zoho Apps, and future entries from Adobe.

Also today, Microsoft announced it will be distributing full versions of Office 2010 online, through a service entitled Click-to-Run. Trial editions of the package will be made available through this service on virtual machines, probably executable through Virtual PC on XP and Vista, and Windows Virtual PC on Windows 7. This will solve the problem that Betanews discovered with the current Office 2010 Technical Preview: Because of the way Office 2007 configuration works, Office 2010 applications in general (not just Outlook) cannot effectively co-exist on the same PC with Office 2007 apps. So anyone trying a future trial edition of Office 2010 in the conventional manner would have to uninstall Office 2007 -- not something folks will have an incentive to do.

On the bad side, a virtual Office 2010 will not be able to co-exist with the customer's current e-mail profile, which will make testing Outlook 2010 more difficult within the virtual envelope. But it will be safer. Microsoft said today that customers of Click-to-Run will be able to purchase Office 2010 directly online, download it, and then install it.

Both Click-to-Run and Office Starter will contribute to Microsoft's efforts to reduce publishing costs, as both methods are no longer reliant upon physical media at the customer end.