Thursday, August 2, 2007

Microsoft Works to become a free, ad-funded product

Microsoft’s next version of its small-business/home productivity suite, due imminently, will be free and ad-funded.

Microsoft Works 9.0 — which will be the new product’s name, if Microsoft opts to stick with its current nomenclature — might also debut at some point as Microsoft-hosted low-end productivity service, as many have been speculating. A hosted version of Works would give Microsoft a head-to-head competitor with Google Docs & Spreadsheets and other consumer- and small-business focused services, analysts have said.

For the time being, however, the new version of Works will be ad-funded, according to Satya Nadella, the newly minted Corporate Vice President of Microsoft’s Search & Advertising Platform Group. Nadella told me during an interview on July 27 that Microsoft recently released the new ad-funded version of Microsoft Works.

If Works 9.0 is out, I haven’t found it yet — other than a couple download links on torrents and other sharing sites. Anyone else seen it?

(I’ve asked Microsoft for more information on the new ad-funded Works suite. No word back yet. Update: Even though Microsoft’s own vice president discussed the product, no one will talk. The official comment, via a Microsoft spokeswoman: “We’re always looking at innovative ways to provide the best productivity tools to our customers, but have nothing to announce at this time.”)

Nadella added that Works will be just “the first of the ad-funded software we are going to do.” When I asked for other examples of products Microsoft might decide to make free and ad-funded, he mentioned Office Accounting Express — a product which is currently available as both a free download and as a component of certain Office Live paid subscriptions. He also said software downloads/shareware was another category ripe with products that could be free and ad-funded.

The decision to make Works ad-funded is not coming out of the blue.

Microsoft Works 8.0, which Microsoft introduced in 2004, sells for $49.95. It introduced the 8.5 OEM update to Works in 2006. Microsoft Works includes an address book, calendar, database, dictionary, PowerPointŠ¾ Viewer, basic Word, and templates. Traditionally, a number of PC makers have preloaded the Works product on low-end PCs. But with its Office Ready PC program, Microsoft has begun pushing PC makers to preload higher-margin Microsoft Office rather than the cheaper Microsoft Works, on new machines.

In his October 2005 “Internet Services Disruption” memo, Chief Software Architect Ray Ozzie noted that “(p)roducts must now embrace a ‘discover, learn, try, buy, recommend’ cycle – sometimes with one of those phases being free, another ad-supported, and yet another being subscription-based.” He added: “Groups should consider how new delivery and adoption models might impact plans, and whether embracing new advertising-supported revenue models might be market-relevant.”

Even before Ozzie outlined his marching orders, Microsoft was mulling an ad-funded version of Works. According to a document seen by in 2005, Microsoft was already running the numbers on what it would take to do an ad-funded version of its low-end suite. According to that report:

“If ad revenues exceed 67 cents per year, we could actually give Works away and still make more money,” two Microsoft researchers and one person from MSN stated in a paper presented to Chairman Bill Gates at a Thinkweek brainstorming session earlier this year.”

Do you think a free, ad-funded version of Microsoft Works — even if it’s not a “service” — will help Microsoft fight off Google and other Web-based productivity suite vendors? Do you still expect Microsoft to release a non-ad-funded, paid version of Works as a subscription service at some point?

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