Microsoft 'Equipts' Consumers
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News Analysis. Why would anyone pay $150 for Office 2007 Home and Student when they could get it and more for less than half the price? |
That's the question Microsoft is hoping some consumers will ask about Equipt, the new subscription offering formerly code-named Albany. The question Microsoft might not want these same people to ask: Why spend 70 bucks when Google Docs is free?
This morning, Microsoft announced that the subscription product would be available through 700 Circuit City stores on July 15 for a 12-month subscription fee of $69.95. Equipt comes with the aforementioned Office version, Windows Live OneCare, Mail, Messenger and Photo Gallery. The subscription service also connects to Office Live Workspace for document sharing and collaboration. Equipt can be activated on up to three PCs, which is consistent with current Office Home and Student and OneCare licensing.
I expect plenty of commentators to view the announcement as a Microsoft versus Google thing. There's a little of that maybe, but I see Equipt more as Microsoft advancing further into the consumer subscription market and more closely aligning desktop and Web services. Revealing: Microsoft is leveraging a very different distribution channel than Google (more on that in a few paragraphs).
The question Bryson Gordon, Office group product manager asks: "How can we take rich client experiences we have today and how can we extend them into the cloud?"
That's exactly the thinking to expect from a Microsoft executive—how to maintain and extend the relevancy of desktop software to Web services. More importantly: How to best provide consumers with the newest software, while collecting ongoing subscription fees from them. "This is a subscription service, and one of the things we're committed to is making things better over time," Bryson said. "With Equipt everything is up to date." That includes the newest Office version.
Microsoft also sees Equipt as an anti-piracy effort. "The majority of the sales of Equipt are going to be coming from people that have an old copy of Office or received a copy from Bob up the street," Bryson said.
Equipt risks more to Microsoft than it offers a competitive advantage against Google's Web-based productivity suite. The subscription software/service could pull sales from à la carte OneCare and full-version Office Home and Student, which accounts for the majority of Office retail sales, according to the NPD Group.
"Yeah, there probably is going to be some cannibalization," Bryson conceded. But Microsoft research shows cannibalization will be low, he emphasized. Maybe, but I wonder about Office Standard. It's not like Microsoft is carding people to see where they'll be using the software. For many small businesses, particularly those already using Hotmail, Equipt may be all the Office equipment they need.
That's good segue for Microsoft's novel, early distribution channel for Equipt. "To reach the right kind of customer, we need a certain kind of sales motion," Bryson said. "With Equipt it's not just a process of put the product on the shelf, or put the product on the Web. Retail is the right place for us to start."
But not just every retail store. At launch, Equipt will only be "available in 700 stores across Circuit City." Bryson said. Microsoft has chosen a single distribution channel. Bryson said Microsoft picked Circuit City because the retailer was ready to engage customers in a "kind of a high-touch scenario. Equipt is better sold than bought."
Really? What's so high touch about Office? Everything. Most products are sold, not bought. Marketing matters—it's everything. Equipt is different and potentially confusing to consumers because it changes the model: no perpetual license, 12-month recurring fees and blended desktop and Web-based products. Equipt should be sold, as should many, many other Microsoft products that get shelf space and little more.
"We were looking to limit the distribution of this...to ensure the sales process was in place," Bryson said.
The choice of a single retailer is smart. Microsoft partners better than any other company on the planet. But to a fault. Microsoft deals too evenly with too many partners. Some partners do better than others; they should be given preferential treatment. I commend Microsoft for singling out Circuit City.
Bryson made it absolutely clear that Equipt will be available through other channels, and perhaps, even shortly from other retailers. Circuit City distribution puts other retail partners on notice: The rules are changing. Microsoft needs to do a whole lot more of picking favorites even if it pisses off some partners. A big Windows Vista plus Windows Live marketing blitz is soon coming. If I were Microsoft, only the best and most cooperative retailers would get the in-store displays, co-marketing dollars and Sunday circular ad support. It's long past the time when Microsoft played favorites.
Something else before closing: The name works. Equipt evokes good connotations of having the right equipment. Microsoft's nomenclature continues to slowly improve. That said, the packaging and subbranding, which I didn't see until today, really don't work. Rather than giving the new product its own, clear-brand identity, Microsoft put box shots of Office Home and Student and Windows Live OneCare on the Equipt box. Mixing brands like this might seem like a good idea by leveraging existing products. I don't agree. Like other, newer Microsoft products with better nomenclature—Expression Studio, Zune or Surface, among others—Equipt should have a distinct brand and logo. Hopefully, the in-store marketing materials will be better.
Related Posts:
- Microsoft Takes the Toll Road to Albany, Microsoft Watch, April 18, 2008
- How Will Microsoft Get to Albany?, Microsoft Watch, March 27, 2008
- Who Pays for Software Plus Services?, Microsoft Watch, March 15, 2007
Comments (14)
MS Office is a good product, but it is over priced for home users. I use MS Office at work and Open Office at home which is free like Google docs.
"Circuit City stores on July 15 for a 12-month subscription of $69.95"
Sorry, but I just don't see a reason to spend that kind of money for personal use.
Posted by JM | July 2, 2008 1:17 PM
I think this is a great way for Microsoft to offer users a complete Software experience, security, and productivity tools to manage information in a seamless, end to end way that benefits the end user. Getting Office 2007 especially exposed to new users with its innovative Office Fluent user interface is also a great move. Real value here. Kudos to Microsoft on this one!
Posted by Andre Da Costa | July 2, 2008 1:18 PM
Let me see if I get this straight:
"...subscription product would be available through 700 Circuit City stores on July 15 for a 12-month subscription of $69.95..."
"How can we take rich client experiences we have today and how can we extend them into the cloud?"
How about selling the IN the cloud? Did you ask Bryson why I can't purchase and download it outside the US? Does it come with a headset like the X-Box Live subscription? Why can't I just download it and burn it on CD? Does he really need to have my face on Circuit City's surveillance cameras taking a copy of his software with me? Does it come on a Blu-Ray disk that downloading would take the best part of a month?
Also, not much of an initiative against piracy if you sell it only in the country with one of the lowest piracy rates. I guess all those overseas pirates are just going to go out and get their US Visas to rush to continental US and flood Circuit City stores for their copy.
My guess is that "Yeah, there probably is going to be some cannibalization," is a total understatement. If they released it on the web people would rush to it and use it as an MS Office replacement. Confirming all possible suspicions that nobody really needs all that bloat of features called Office 2007 and would willingly pay much less to get much less with the benefit of online collaboration.
Posted by Gerardo Tasistro | July 2, 2008 1:45 PM
Jamaica National Minimum Wage:
The National Minimum Wage was increased from $2,800 per 40-hour workweek to $3,200. This $640 a day is 'lunch money'. This is untenable.....
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70.00 USD = 4,987.50 JMD
This is $95.00 per week per life, serious thing for a country in development.
Thanks to God exist Open Office!!
Remember, do not everybody get MS "help"
Posted by Marco | July 2, 2008 2:20 PM
http://www.tgdaily.com/html_tmp/content-view-38221-140.html
Quoting: "To us, this one seems a tough one to swallow. In the end, PC users are used to owning their software and paying for software only once – usually at the time you purchase a new PC. It isn’t particularly difficult to see Microsoft’s motivation to get you hooked on a software subscription model: On average, you may be paying much more for your software than you do today and you get used to a subscription model and may be much more likely to subscribe to other services as well".
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But the 'Milanese's truth' is, the things are changing and very fast!
Posted by Marco | July 2, 2008 2:44 PM
Microsoft just can stand that there are companies making money on the Internet and they are not one of them. Everything they throw out on the Internet is a huge disappointment. It is killing them. It is starting to get ridiculous. Windows and Office is really the only two things that have brought them to where they are. Nothing else they have done has been better than mediocre at best. This won't last long. Then they'll kill it and try something else. Pitiful.
Posted by Bill Brock | July 2, 2008 3:05 PM
"the things are changing and very fast"
You can bet on it. Hold on to your hat.
Posted by portuno | July 2, 2008 4:03 PM
Why would anyone pay $150 for Office 2007 Home and Student when they could get it and more for less than half the price?
Because Google Docs is less than half of Microsoft Office 2007...
Posted by Mike | July 2, 2008 5:19 PM
I can't see any reason why home users and students would buy Microsoft Office at all in the future.
There are so many great free alternatives out there including; Google Docs, IBM Lotus Symphony, OpenOffice and Star Office.
The main things to consider are file compatibility with Office 97, OpenXML and OOXML.
Posted by Gavin Bollard | July 2, 2008 6:16 PM
The question Microsoft does not want these same people to ask: Why should I fork out $$$ to use software and open my documents, when I don't even own the software outright.
“To be fair, people never really bought any software from Microsoft anyway. They paid for a license to ‘rent’ the software, rendering them tenants of their own computers which they paid for. With recent versions of Windows, the landlord has a convenient kill switch, too.”
D.
Posted by DOUGman | July 2, 2008 6:55 PM
FWIW OneCare is a VERY nice product. The bundle means you are getting Office Home and Student for $6.67 per computer per year.
Posted by roger | July 2, 2008 8:48 PM
Andre Da Costa wrote:
"I think this is a great way for Microsoft to offer users a complete Software experience, security, and productivity tools to manage information in a seamless, end to end way that benefits the end user."
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This is a great idea!
So now Microsoft will let us rent Windows XP Pro? It would be worth it to rent it for $15 a year for five years.
Where do I sign up?
Posted by Ralph | July 3, 2008 8:18 AM
Have to agree with Gavin Bollard comment, why pay the fat cats at Micro$oft for what you can get for free. OpenOffice, Linux, and free antivirus. All better than MS expensive products, as well. And if you are using Linux, you might as well add in KOffice as another free one. You can start to set yourself free by a visit to distrowatch.com
Lets see, at one time not too long ago, (about 2 years ago) Microsoft had 95.3% of the desktop market used on the internet. An very impressive figure, and most likely one that could not be maintained. Since then Windows market share has declined, fastest since the advent of Vista.
Study claims Windows usage market share could fall below 90% soon
www.tgdaily.com/content/view/38232/113/
Quote from the link; " A new study released by Net Applications indicates that a decreasing percentage of the Internet population is using Windows as their operating system. It appears that Mac OS X could soon be listed in the double digit-range, while Windows could fall below the 90% mark."
Mac OS X market share surges 32% in one year
www.computerworld.com/action/article.do?command=viewArticleBasic&taxonomyName=operating_systems&articleId=9106098&taxonomyId=89&intsrc=kc_top
Quote from the 2nd link; "Also showing gains in June were Microsoft Corp.'s Windows Vista and Linux, which climbed 8% and 18%, respectively, to end the month accounting for 16.14% and 0.88% of the online operating system market."
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Whatever you want to say, Microsoft has had an incredible run of dominating the users desktop market. Mac once before might have had 8% of the market, many years ago. OS/2 Warp 3 from IBM was able to achieve 6% of the market for a short period of time. But now we see see a trend away from MS, as the MS product has become expensive, prone to malware, which makes it an extremely poor choice for the internet. Also the WGA and DRM features in newer versions of Windows cannot be helping. Plus all the mis-steps and problems with "updates, fixes, and service packs," that MS has released lately, would also make people switch. And then there is all the spying that MS does on its users.
Now I do not entirely agree with the results of Net apps, especially the linux results. As other sites report that figure much higher. But one thing it does show, is that Linux and Mac are increasing market share.
Posted by chips | July 4, 2008 12:38 PM
This new scheme is more like the commercial "per seat" fee that big business pays for many apps or used to but in most cases started paying on a per server basis.
The fee og $69.95/year for 3 PC's isn't bad if you have 3 PC's to install Office on, considering Office upgrades run about $200 each for one PC about every 2-3 years. The problem is that for a student or a single PC user, $69.95 is a lot of money, especially to pay annually.
This of course doesn't include the programs that aren't required but are included, and all the bugs, viruses, and sceruoty issues you could ask for. They should actually pay us to use their software since we spend so much time downloading, patching, and restarting.
I bought a MacBookPro last year and have the MacOffice 2004. Oddly enough, it only costs about $99 to upgrade o MacOffice 2008 (which is supposed to fix all the crashes in my email from the recent patches). To upgrade Office from XP to 2007 it would cost at least $199+ or the new annual subscripton.
Posted by Chris | July 9, 2008 1:15 AM