Microsoft eyes new ways to sell Office

Many of those people are in emerging markets, where Microsoft office 2007 is trying things like prepaid cards good for two or three months worth of Office use. But Capossela agreed that there is an opportunity to reach consumers in well-developed markets like the U.S. and Europe as well.

"Office is used by tons of those folks, but it's often old versions of Office," Capossela said, adding that the company is actively trying to see whether different ways of pricing or offering Office might prompt more consumers to use the latest technology.

"Would prepaid cards work in the U.S.?" We don't think so, but those are the types of questions we try to ask ourselves," he said.

One possibility is to introduce some sort of online productivity options as part of the Office Live suite of software. BusinessWeek reported last year that Microsoft was exploring such a move.

Microsoft Office Ultimate 2007 won't say for sure that's where it's headed, though CEO Steve Ballmer did note in his keynote speech on Tuesday that Microsoft would soon rebrand its existing small business Office Live tools as it plans to add services for individuals to the Office Live line.

In its initial incarnation, Office Live has been about making new services available over the Internet, primarily e-mail and Web hosting. But Microsoft has been grappling for some time now about whether to offer more of its consumer software for free, supported by advertising.

An internal Microsoft position paper, as reported by CNET News.com in 2005, made the case for an ad-funded version of Microsoft Works, noting that Microsoft gets only a couple of dollars per new computer that sells with a bundled copy of Works. That revenue could easily be surpassed with an ad-funded version.

While those economics may indeed be true, Capossela pointed out that it's not just about revenue. One of the challenges is whether people really want to see ads when they are in a spreadsheet or word processing program.
"You can't just apply the economics," he said.

And Microsoft may not need to take its entire Office or Works product online. The company has talked broadly about a "software plus services" strategy in which online services are used to augment existing software products. One option that would fit that model might be for Microsoft to offer a "light" version of its productivity tools over the Internet, while relying on the full Office for more advanced document creation.