The Hidden Cost of Microsoft's 'Free' Online Office Suite

Despite what you've heard, the online version of Office 2010 announced by Microsoft earlier this week won't be free to corporate users, and isn't a threat to the likes of Google, Adobe, or even Zoho, which sells online productivity software to small and medium-sized businesses.

It's true that Microsoft will offer consumers a free "lightweight" version of Office 2010 through their Windows Live (formerly Hotmail) accounts. But that largess doesn't extend to business customers, who will either have to pay a subscription fee or purchase corporate access licenses (CALs) for Office in order to be given access to the online application suite. Microsoft already does this with email â€" the infamous Outlook Web Access (or OWA, pronounced ow!-wah! because of the painful user experience).

But wait â€" there's more! A Microsoft spokesperson told me that customers will need to buy a SharePoint server, which ranges from $4,400 plus CALs or $41,000, all CALs included if they want to share documents using the online version of Office 2010.

So let's recap this notion of a free online Office suite for business:

• You need a SharePoint server and license in order to collaborate, and either:
  
  • You need to pay license fees for an on-premise version of Office 2010 or
  • You need to pay an as-yet-unspecified subscription fee.

In fact, the likes of P&G, Prudential, Fairchild Semiconductor are testing alternatives to Microsoft Office because they're tired of paying full price for software that the vast majority of its employees don't use to its fullest extent, and are finding that Google, Zoho and Adobe offer perfectly acceptable alternatives to Office, even for so-called power users -- at a fraction of the cost.

Speaking of which, Microsoft still hasn't said what it means by "lightweight," or provided pricing information for the subscription offer. But the shock produced by, and the timing of its announcement had us thinking that Microsoft had seen the light, turned over a new leaf, was finally accepting the idea that Web-based software is more than just another delivery mechanism -- it's a way for software vendors to engage with their customers, to exchange service and continual product improvements for fair subscription fees, and to win business by being better than the competition -- not through lock-in contracts and software written to be incompatible with competing products. But in fact all we have is Microsoft finding yet another way to trick customers, this time by subverting the idea of software-as-a-service and transforming it to service-bait-and-switch.

[Image source: EssG via Flickr]