Order up MS apps at Internet cafe

Customers of the mammoth 800-computer-terminal easyEverything cafe that will open in New York City's Times Square on Nov. 28 will be able to use Microsoft's Office set of programs for a small fee, likely around $2 a session.

The new pricing scheme is an early precursor of Microsoft's planned shift to selling software as a service rather than as a packaged product. Under the .Net initiative that the company announced earlier this year, Microsoft will likely charge consumers regular monthly fees for its products rather than make them pay a lump sum up front.

The software giant expects to study usage patterns of its software at the easyEverything cafes in order to draw lessons for .Net pricing and services.

In addition to the Internet cafe rentals, Microsoft (msft) has recently begun licensing application service providers, or ASPs, to host its software. The ASPs run the software on central computer servers, which their customers access by connecting through a network. ASPs generally charge monthly fees, so Microsoft also views them as another test market for its revamped pricing strategy.

Microsoft says it doesn't expect the Internet cafe software rentals to cut into its existing product sales significantly. A large proportion of the users at London-based easyEverything's 12 existing facilities are tourists or workers on the move, who might already own a copy of Microsoft Office at their home or office.

"When people think about mobility, they think about wireless," says Gordon Smillie, director of the strategic business group at Microsoft's United Kingdom operations. "This is about mobility. It's just not about wireless."

Microsoft (msft) The Microsoft software rental program will debut in easyEverything' s New York facility and later be available in its existing cafes in Europe. The charge for using the software comes on top of easyEverything's time-based usage fees, which currently range from 17 pence (27 cents) an hour in the middle of the night to 3 British pounds ($4.31) an hour during peak periods. Currently, easyEverything customers can use Microsoft's scaled-down Works suite of software without paying an extra fee. Under the new rental program, Microsoft Office 2000, Microsoft Works Suite 2001 and Microsoft Encarta 2001 will be available.

Since the launch of easyEverything's first aircraft-hangar-sized facility in central London last year, the chain has revolutionized the Internet cafe business, drawing unexpected volumes of customers. The average easyEverything store receives about 5,000 visitors a day, and all of the existing European cafes registered 1,250,000 visits last month. The chain, founded by Stelios Haji-Ioannou, the colorful son of a Greek shipping magnate, is embarking on an aggressive expansion plan in the U.S. and Europe that should give it as many as 22 outlets before the end of the year.

The Microsoft program is a prototype for other low-cost pay-per-use services that easyEverything expects to develop. And Microsoft plans to expand the software available to include its portfolio of games, among other things.

"We can offer more and more sophisticated software to more and more sophisticated users," says Haji-Ioannou, the chairman of conglomerate easyGroup, which owns easyEverything and whose other businesses include a budget airline and cut-rate Internet-based car-rental company. His New York City Internet cafe is a bold bet on the demand for a massive consumer facility in a country where home and work Internet penetration is higher than it is in most areas of Europe.