Trying to Sell Office in an Era of Free Office

As Office 2010 hits retail shelves on Tuesday, it finds itself competing with a host of free rivals, not the least of which are two new options from Microsoft itself.

Redmond has long had to deal with free alternatives, including everything from OpenOffice to Google Docs. And Microsoft has also battled both piracy and the "good enough" factor that prompts many consumers to stick with older software--sometimes several versions old.

With Office 2010, though, Microsoft has created a couple of its own new products that could create an opening for those who want Office, but don't want to pay. Most prominent are the free, browser-based products known as the Office Web Apps seen as a response to Google Docs. The software, which includes slimmed down versions of PowerPoint, Word, OneNote and Excel, are all free to consumers, along with 25 gigabytes of online storage via Windows Live. However, the applications only work when the browser is connected to the Internet.

The second free version of Office is Office Starter, a product that is replacing Microsoft Works as the software most consumers will get for free when they buy a new PC. Although it will give users a genuine, if limited version of both Excel and Word, Microsoft Senior Vice President Chris Capossela said that the goal is to make it easier, not harder to sell the full version of Office.

"Consumers have an Office experience right out of the box," Capossela said. Plus, since the bits for the full Office are on the PC, retailers can sell just a simple card with a product code--cards that can be placed not just in the software aisle, but also in other key selling locations, such as near new PCs and by the cash register.

As for the notion that customers will just stick with the starter edition, Capossela said he isn't too worried. He notes that Windows itself has a basic word processor--WordPad, included by default. And while Starter does include a bona fide version of Word and Excel, he said it lacks PowerPoint, OneNote, as well as many key spreadsheet and word-processing features. To drive that point home, Starter also has a small advertisement that rotates different messages reminding users what they are missing.