Friday, February 02, 2007

Renting an Office

Microsoft Office, that is; the software behemoth is testing a pay as you go rental scheme for the must-have (whether you like it or not) suite.

Would you pay $15 a month to use Microsoft Office 2003?

Some users, who are helping Microsoft test whether renting Office might be preferable to buying it for certain groups of customers, say they would.

Microsoft has been testing quietly a new "pay-as-you-go" rental program for Office 2003 in South Africa, Mexico and Romania, and will decide in the next couple of months whether to extend the program to include Office 2007.

A couple of observations:

  • Pay as you go is a smart idea. Office's pricing is a problem for home users (who often need Word, and maybe Excel) but don't want to shell out the rather high cost for it. A monthly charge is easier to bear.
  • It's clearly a response to competition from things like OpenOffice and Google Documents & Spreadsheets, which are reasonable alternatives for those who don't want to pay for Office.

That said, I don't think they've gotten it right.

First of all, the scheme is not exactly simple:

In the "Office Prepaid Trial," Microsoft is relying on system builders to sell users cards that provide them three months' worth of Office 2003 usage for a set fee, said Chris Capossela, a corporate vice president with Microsoft's Business division. With FlexGo, an entire PC system — hardware and software — is leased; with the Office Prepaid Trial program, only Office (either Office Small Business or Office Student and Teachers Edition) is rented out, Capossela explained.

Under terms of the Office Prepaid Trial, users must return to the system builders who sold them their original PC in order to purchase another three-month incremental of Office-rental time. If a user decides against re-upping, the version of Office 2003 that is on the user's PC goes into reduced functionality mode, providing users with nothing more than the ability to view documents.

You need to be able to go to Microsoft's site and sign up for it to work, I think.

Second, the price is too high. I think Microsoft can probably get away with charging for something that others are giving away free, because theirs is the standard that everyone has to coexist with. But $15 is too much - $180/year - for this. Maybe $5. Maybe less.

Third, it generally stinks of missed opportunity. Why not bundle some additional services for extra charges so that a small business can get things an entire suite of business apps for a monthly fee?

In fairness to Microsoft, they're in a tough spot; Office revenue is very important to the company, and a software as a service model that's too appealing will cut into that revenue. But competitive pressure might force the issue.

How's the trial going?

Capossela said the four-month-old Office Prepaid Trial has been really successful in South Africa and Romania, but not as well received in Mexico. He said he wasn't sure yet what accounted for the differences in user reception of the trials.

Capossela added that Microsoft will be reviewing some time in the next couple of months the feedback it has received as part of the trial and will decide then whether to extend it to other countries and whether to add Office 2007 to the list of rentable Office SKUs.

It will be interesting to see if this takes off, and how well Microsoft can respond to competition in this area.


Cahill said...

Try to "google office" stuff. Docs, spreadsheets, etc. for free.

Microsoft_SUCKS said...

Try ThinkFree for word processing, spreadsheets and presentation and try Projity for project management. They combine to offer replacements for all Office components. Google is another good alternative but they don't have project management and their other solutions don't seem advanced for such a company. I really don't like Office and this sounds like a klug

Anonymous said...

Speaking of interesing Microsoft marketing...
A personality quiz that tells you which Office application you are; it's free!