Microsoft to Consumers: Are You Going to 'Albany?'

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Microsoft Friday announced the beginning of the private beta test of an upcoming subscription software service for consumers built around the company’s Office 2007 productivity suite.

Codenamed “Albany,” the service and product bundle will provide subscribers with a copy of the Office Home and Student 2007 suite along with Microsoft’s (NASDAQ: MSFT) Windows Live OneCare antivirus service.

It will also include several of the company’s already free Windows Live services — Mail, Live Messenger, and Live Photo Gallery – as well as adding a connector on the Office 2007 toolbar to link with the Microsoft Office Live Workspace collaboration service. All of this will be available from a single installation program meant to eliminate confusion from multiple installations.

Introduced in October, Office Live Workspace is a free cloud-based storage service where users can store and retrieve their Office documents online and collaborate with each other.

Two analysts described Albany as primarily an “experiment” in what will interest the consumer marketplace, and whether they can milk more revenues out of the company’s Office cash cow.

“They’ve been wanting to do that [subscription pricing] for a long time to get the recurring revenues,” Roger Kay, president of analysis firm Endpoint Technologies, told InternetNews.com. “It makes them less subject to economic vagaries and provides a more predictable revenue stream,” Kay added.

Meanwhile, Rob Helm, director of research at Directions on Microsoft, sees both an attempt to sell more units of the explosively popular Office 2007 as well as a way to encourage consumers to sign up for the OneCare service.

“If users don’t want trial [time-limited] copies, this is another way to for Microsoft to get its software into their homes,” Helm told InternetNews.com.

Once Albany is released, users will pay a monthly subscription fee. If users decide they no longer want the service, they will lose access to Office and OneCare, but not to their documents or the free services, according to a Microsoft statement.

“Albany will be offered on a subscription-basis and can be installed on up to three home PCs,” a Microsoft spokes person said in an e-mail to InternetNews.com. “Users that keep their subscriptions up-to-date will get the latest security and protection features and version upgrades of Microsoft Office Home and Student.”

Even though Microsoft specifically referred in the statement to the subscription package in relation to the company’s software-plus-services initiative, the company says it does not see the subscription model displacing its core Office sales model.

Helm agrees. He said he doesn’t see the subscription as a logical step to providing Office to enterprises through the cloud via the company’s recently branded Microsoft Online for Business offerings. Most corporate IT shops already have Enterprise Agreements with Microsoft anyway, he said.

“This is more about trying to expand the market for OneCare by tying it with a very successful product and a common installation package,” Helm added.

The offering, however, may have a little to do with a Microsoft response to Google Docs. “Google Docs is not an immediate threat, but it is a long-term treat,” Helm said.

However, at least in the near-term, there is a distinct difference between the two offerings. With Albany, Microsoft is providing the entire shrink-wrapped Office product instead of a Web-based set of productivity applications.

Microsoft has not disclosed any further dates on Albany’s schedule, except to say that a public beta will begin “soon.” Nor has the company said anything yet about pricing.

Indeed, cost may determine the success or failure of Albany. A OneCare subscription starts at $49.95 per year, though that covers only one PC. Meanwhile, Office Home and Student 2007 lists at $149.95 for a one-time purchase, although it can easily be purchased for less than $120.

This article was first published on InternetNews.com.