Microsoft is not satisfied with 500 million Office users; they want more. Actually, I think they are following the "not let a single sparrow fall unnoticed" theory of the universe. However you do computing, however you prefer to acquire software, whatever level of software you prefer, Microsoft wants to be your office (deliberate small "o") software supplier.
Hence, Equipt, a new version of Microsoft Office 2007 targeted at the Home and Student user who doesn't want to pay for a permanent copy, but prefers to buy a subscription for $69 a year, including Word, Excel, PowerPoint and OneNote for personal and school projects; Windows Live OneCare, the all-in-one security and PC management service; Windows Live tools, such as Windows Live Mail, Windows Live Messenger and Windows Live Photo Gallery, and Office Live Workspace, a new service from Microsoft that saves documents to a dedicated online Workspace permitting them to be shared with friends and classmates. Version upgrades of of Office and Windows Live OneCare are included in the Equipt subscription.
The downside is, it's a subscription and it only works while you pay for it. Stop and you can still read your documents, but you can't edit them or create new ones. OneCare upgrades and services would stop. Like other Home and Student licenses, it covers three PC's in a household -- say the desktop in the family room, the laptop in Dad's den, and the laptop Johnny takes to school. Johnny can take his laptop off to college and still be covered, until he changes he permanent address. Theoretically, he when then no longer be a member of the household (although how Microsoft would know this, I'm not certain).
This is not intended for small business (which many analysts were expecting to see a new Microsoft Office offering in the subscription or on-line vein arriving in the market around now). The license precludes this edition of Microsoft Office being used for commercial (for-profit) use. My Microsoft contact pointed out (we had a few conversations about the details of the announcement) that since Microsoft 2007 Office for Home and Students does not include Outlook (it does include Windows LiveMail to manage email as well as an IM manager), it wouldn't appeal to business users; of course, one could add a copy of Outlook, but at $109 and up that would probably make the combo less appealing.
Please note that this is not a SaaS product (although it has a SaaS component, in line with all of Microsoft's current Office offerings). The office parts come in a box (currently soon to be available from Circuit City and then from others in the channel); this is traditional desktop software, running on your PC. The add-on services run on Microsoft servers in the cloud (e.g., OneCare and the shared document service). Microsoft wants you to think of this as software (on the desk) plus services (in the cloud).
Will this work? We're not sure to whom it will appeal. It means you get built-in upgrades (which most home users don't bother with). Assuming a home user would keep his software for three years (they usually keep it for as long as they keep their computer, typically four to five years), they'd pay $210, more than the cost of a regular Home and Student package (they could almost buy it over again), less than higher-end Office offerings. If they usually keep their software (without upgrades) for five years, this would probaby not be economical (at $345 for a five year subscription) unless they value the upgrade and security software Equipt includes.
We suspect it will eventually end up in OEM bundles with 90-day or longer free trials and many reminders to sign up for the subscription with a credit card, once the user has already put his documents and spreadsheets into the software. That might work -- and the user could always downgrade to MS Works or upgrade to a regular Office license without much fuss, we suspect.