I am baffled by today’s announcement of Microsoft Equipt.
I had a chance to beta-test this product beginning in March, when it was available under the code name Albany. The released product combines Office Home and Student 2007 and Windows Live OneCare, plus access to a cloud-based storage and sharing service called Office Live Workspace. The version I tested was indistinguishable from retail shrink-wrapped versions of the software and worked perfectly.
Today’s announcement adds a price tag to the mix: $69.95 for a one-year subscription, with the right to install the software on up to three different PCs (the same as the shrink-wrapped packages of the two separate products). Office Home and Student 2007 typically costs $129, and the going rate for an annual subscription for a security suite like Windows Live OneCare is about $30 (or $90 for a three-year term), which means the Equipt subscription costs much less upfront and the shrink-wrapped option doesn't hit the break-even point until the end of the third year. Assuming Microsoft updates Office every two or three years, the subscription deal gets even better: Equipt users will be upgraded to the next Office version as soon as it’s available, whereas Office Home and Student 2007 isn’t eligible for upgrade pricing and users would have to pay another $129 to upgrade.
Sounds like a great deal, so why was I baffled?
Well, for starters, there’s the name. Equipt? Seriously? What is that supposed to mean? Presumably, it suggests a “well-equipped PC.” It doesn’t leverage any of the brand equity in the Office name and suggests hardware rather than software or a cutting-edge service.
And Microsoft’s press release delivers co-billing to Circuit City, which is called out in the subhead as if it were an exclusive deal. The body of the press release reinforces this perception: “Microsoft Equipt will be sold in nearly 700 Circuit City stores in the U.S. starting mid-July 2008.” But this part, several paragraphs later, suggests that the exclusivity, if any, is only temporary:
“We are very pleased to be the first partner to offer Microsoft Equipt through nearly 700 Circuit City retail outlets throughout the U.S.,” said Elliot Becker, vice president, general merchandise manager technology, Circuit City.
Mary Jo Foley dug a little deeper:
Starting on or around July 15, Equipt will be sold exclusively through the Circuit City retail chain, but Microsoft is looking to add other distribution channels for Equipt in the U.S. and abroad, said Bryson Gordon, Group Product Manager for Office. Gordon said Microsoft is looking to add other retail partners, PC makers interested in pre-installing the Equipt bundle and other “direct-from-Microsoft” channels over the next 12 months.
It certainly takes some of the luster off today's Microsoft announcement when their exclusive partner, Circuit City, announces bad news on the same day: the white knight (Blockbuster) that had been considering an acquisition of Circuit City has backed out of the deal, two weeks after the company announced big losses. If your major partner is struggling financially and no stronger partners are willing to step up and begin selling this product, what does that say?
As for customers, the most interesting option for the subscription package is as a way to replace the trialware versions of Office normally bundled on new PCs and available for conversion at steep prices. Customers who would resist the $199 price tag of Office Basic or Standard might be willing to pay $70 for a one-year subscription (as long as they don’t need it for business purposes).
Conspiracy theorists can see this as the opening salvo for Microsoft’s attempts to convert all its software, including future versions of Windows, to pay-as-you-go services. Of course, it really isn’t new at all. Businesses that buy into Software Assurance have been paying the equivalent of subscription fees for years, and Microsoft has run trials of subscription software in other countries. The real question is whether this becomes an alternative to conventional open-ended licenses or whether it’s intended to be a replacement.