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'Bingbooks' need free Office to compete with Chromebooks

Gregg Keizer | Jan. 21, 2015
Microsoft's strategy in giving away one-year Office 365 subscriptions to many of its tablet- and notebook-making partners is all about matching not just the price but also the functionality of Chromebooks and cheap Android tablets, an analyst said today.

But Microsoft has been aggressively loosening the ties that once bound Office to Windows, selling Office on the iPad and wrapping up work on an Android tablet edition, giving consumers more features for free, and letting any iPhone or Android phone owner run the suite's core apps without charge as long as they're not used for business purposes.

"In talking to Microsoft, their answer has been that they can do unique things as far as commercial deals on their own devices, discounts on Office and Skype as a way to sell those," Dawson added.

Microsoft has not only diluted that advantage by giving Office to Windows OEMs, but more importantly, by freeing it from most fees on other platforms — iOS and Android in particular.

"It's true that you can't buy an iPhone or iPad or Android device with Office [pre-installed], so that does set Microsoft's devices apart, assuming people see value in Office to begin with," Dawson continued. "But as Office functionality becomes more free, the appeal of the paid version decreases."

Another contributing factor to Microsoft's decision to give away Office 365 with some devices, said both Baker and Dawson, may have been a desire to boost the subscriber rolls, then hope that those customers renew at full price a year down the road.

"That's a longer-term strategy," Baker noted.

If so, it puzzled Dawson. "Maybe they think that more devices [in customers' hands] will drive sales of other Microsoft services," Dawson said. "But by giving away Office, that defeats the purpose." He also reiterated past comments he'd made that because many of Microsoft's services were already free, he saw little that could be monetized in any case.

"Free may just be their strategy for consumers," said Dawson. "And that they'll charge for the business versions."


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