Microsoft to sell Office, OneCare for $70 a year

The move may also set the stage for Microsoft to offer its consumer-oriented programs as "services" over the Web, by acclimating people now to the new pricing model such a shift could require.

The software bundle, which also includes Microsoft's Live OneCare computer security software, will be sold at nearly 700 Circuit City stores for $70 per year.

Bryson Gordon, a group product manager for the Office group, said in an interview that the agreement with Circuit City Stores Inc. is not exclusive, and that the bundle will be available at other retailers and on PCs sold by the likes of Dell Inc. in the future.

Subscription pricing for software has become commonplace in businesses but is a relatively new concept for consumers. The Microsoft Equipt bundle--formerly code-named "Albany"--includes Word, Excel, PowerPoint and OneNote, plus OneCare and a handful of existing free Windows Live applications.

Buying those programs the traditional way would cost about $200, and then consumers who wanted to replace the software with the next version, "Office 14," rumored to be set for a 2009 release, would have to pay full price.

Under the new subscription model, upgrading to a new version is included in the annual cost.

Gordon said Equipt is aimed at people who wouldn't ordinarily buy Office at the same time they purchase a new computer. Instead, they'd repurpose their old Office disks or pirate a friend's copy, he said.

But those same folks are willing to spend extra on security software, Gordon said, and that's why Equipt's $70 price tag falls between the high and low end of popular security programs from vendors such as McAfee Inc. and Symantec Corp.

Office is a well-established cash cow for Microsoft, but the relatively new OneCare software has been slow to catch on, said Matt Rosoff, an analyst for the independent research group Directions on Microsoft. If this model succeeds--and Rosoff gives it good odds because of the low price--that might change.