Microsoft Works to become a free, ad-funded product

Microsoft’s next version of its small-business/home productivity suite, due imminently, will be free and ad-funded.

Microsoft Works 9.0 — which will be the new product’s name, if
Microsoft opts to stick with its current nomenclature — might also
debut at some point as Microsoft-hosted low-end productivity service,
as many have been speculating. A hosted version of Works would give
Microsoft a head-to-head competitor with Google Docs & Spreadsheets
and other consumer- and small-business focused services, analysts have
said.

For the time being, however, the new version of Works will be
ad-funded, according to Satya Nadella, the newly minted Corporate Vice
President of Microsoft’s Search & Advertising Platform Group.
Nadella told me during an interview on July 27 that Microsoft recently
released the new ad-funded version of Microsoft Works.

If Works 9.0 is out, I haven’t found it yet — other than a couple
download links on torrents and other sharing sites. Anyone else seen it?

(I’ve asked Microsoft for more information on the new ad-funded Works suite. No word back yet. Update:
Even though Microsoft’s own vice president discussed the product, no
one will talk. The official comment, via a Microsoft spokeswoman:
“We’re always looking at innovative ways to provide the best
productivity tools to our customers, but have nothing to announce at
this time.”)

Nadella added that Works will be just “the first of the ad-funded
software we are going to do.” When I asked for other examples of
products Microsoft might decide to make free and ad-funded, he
mentioned Office Accounting Express
— a product which is currently available as both a free download and as
a component of certain Office Live paid subscriptions. He also said
software downloads/shareware was another category ripe with products
that could be free and ad-funded.

The decision to make Works ad-funded is not coming out of the blue.

Microsoft Works 8.0, which Microsoft introduced in 2004, sells for $49.95. It introduced the 8.5 OEM update to Works in 2006. Microsoft Works
includes an address book, calendar, database, dictionary, PowerPointо
Viewer, basic Word, and templates. Traditionally, a number of PC makers
have preloaded the Works product on low-end PCs. But with its Office Ready PC program,
Microsoft has begun pushing PC makers to preload higher-margin
Microsoft Office rather than the cheaper Microsoft Works, on new
machines.

In his October 2005 “Internet Services Disruption” memo, Chief
Software Architect Ray Ozzie noted that “(p)roducts must now embrace a
‘discover, learn, try, buy, recommend’ cycle – sometimes with one of those phases being free, another ad-supported,
and yet another being subscription-based.” He added: “Groups should
consider how new delivery and adoption models might impact plans, and
whether embracing new advertising-supported revenue models might be
market-relevant.”

Even before Ozzie outlined his marching orders, Microsoft was
mulling an ad-funded version of Works. According to a document seen by
News.com in 2005, Microsoft was already running the numbers on what it
would take to do an ad-funded version of its low-end suite. According
to that report:

“If ad revenues exceed 67 cents per year, we could
actually give Works away and still make more money,” two Microsoft
researchers and one person from MSN stated in a paper presented to Chairman Bill Gates at a Thinkweek brainstorming session earlier this year.”

Do you think a free, ad-funded version of Microsoft Works — even if
it’s not a “service” — will help Microsoft fight off Google and other
Web-based productivity suite vendors? Do you still expect Microsoft to
release a non-ad-funded, paid version of Works as a subscription
service at some point.

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