Microsoft Puts The Kibosh On Office Lite

Just three weeks ago, the company quietly nixed development on a project, internally called Office Lite, company sources confirmed.

The product was described by one insider as a placeholder between Microsoft Works at the low end and the pricier, feature-rich Office. OfficeLite was to have targeted OEMs and protected Microsoft against incursions from Corel's WordPerfect Office, the insider said.

Microsoft also had originally planned to bundle OfficeLite with MSN 9, its consumer online service, and to offer it via subscription, according to internal memos examined by CRN.

The new strategy is to use the lower-priced Students and Teachers Edition of Office as "the consumer socket filler," wrote Joe Eschbach, vice president of Microsoft's Information Worker Product Management Group, in a message dated Feb. 28. The estimated retail price for that educational SKU is $149 vs. $549 for Office XP Professional Edition.

For all its applications dominance, Microsoft faces challenges. In the past six months Corel has won some high-profile OEM bundling deals with its WordPerfect Office. Sun Microsystems' StarOffice and the open-source OpenOffice are making waves as well. And, some large accounts are complaining about what they perceive to be Microsoft price hikes engendered by last year's licensing plans and hint they may look at non-Microsoft alternatives going forward. (Interestingly, Microsoft said last week it is selling the stake it bought in Corel to Vector CC Holdings.)

White-box players have been looking for an alternative for some time. Pat Derosier, owner of CPUguys, a Hanson, Mass., systems builder, bundles Office only when requested with the PCs he builds.

"People ask for it constantly, but when they see the price they pass," he said.

What systems builders need is a low-cost, Office-compatible product that would enable them to make some margins. Systems builders don't get a reseller discount on Works, Derosier said. "I'd like to make 10 bucks on [the software]. That's fair," he said.

Microsoft also has to protect Office margins. Gartner estimates that the suite accounts for 28 percent of Microsoft revenue and nearly 58 percent of its profits.