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ComputerWire: IT Industry Intelligence

The prospect of a subscription model for Microsoft Corp's Office has been raised again following the leak of an official company presentation to internet web sites that outlined pricing options and new online services for a future version of the suite.

Redmond, Washington-based Microsoft is apparently touting three pricing options for a subscription version of its popular suite, codenamed Next Generation Office (NGO). All NGO pricing options involve a combination of subscription to Office and online services, or just services.

These online services will include: a personal Office homepage; e-mail account and web-based inbox; notifications, to alert users to special events; online scheduling; meeting workspaces to post information relevant to a meeting; team workspace, to share information; and templates, such as online training and communities.

In a prepared statement Microsoft said the presentation should not be interpreted as the next version of Office. A company spokesperson called the presentation, apparently leaked this week, an example of "in-depth research" used with focus groups.

This is the latest chapter in the unresolved issue for Microsoft of how to deal with software subscriptions. Company chief executive Steve Ballmer mooted the concept of subscriptions for Office in 1999, as rival Palo Alto, California-based Sun Microsystems Inc proposed a subscription version of its - then - recently acquired rival StarOffice suite.

The company piloted a subscription version of Office XP - the suite's latest version - in Australia and New Zealand, but mysteriously cancelled plans for a subscription version in the US in May 2001. Microsoft failed to explain the reasons, but insisted it remained "very committed to the subscription model" at that time.

Microsoft's general manager for northern California Matt Pease, subsequently told ComputerWire that a subscription-based version of Office XP would only be introduced in response to customer demand. That demand is not yet there he said.

Microsoft, though, is hamstrung by the issue of money and wrestling with how to make a successful business model from subscriptions. Office accounts for around 40% of the firm's quarterly revenue. Growth in sales, though, has slowed. The question for Microsoft is whether it should sacrifice a core revenue stream to an untried - but potentially lucrative - new business system.

According to the leaked presentation, Microsoft is considering three NGO options it could offer to customers. One is to purchase Office Professional and the proposed online services separately for one year. The suite would work whether or not you renew your subscription to services after the year.

An alternative is an annual subscription to services and Office. In a rather confusing and costly twist, customers can then upgrade to the regular Office Professional suite the following year for $329, but lose access to subscription services.

The final option enables customers to continue using versions of their subscription software after expiration of the year's subscription, but they would be unable to create new files. Instead, customers could only view and print files.

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