Microsoft is getting into the SaaS game with their “Office suite” including Word, Excel, PowerPoint and OneNote. A one-year subscription for three home computers will cost $69.99. This competes with Google and Zoho “office suite” product line.

From Yahoo News:

Microsoft is ready to put its popular Microsoft Office suite online, including Word, Excel, PowerPoint and OneNote. Called Microsoft Equipt, the suite will join the software giant’s online offerings of Windows Live Mail, Messenger, OneCare and Photo Gallery.

Previously code-named Albany, the consumer-oriented Equipt will be available for purchase on July 15 through Circuit City’s 700 outlets nationwide. Each $69.99 one-year subscription will cover up to three home PCs, Microsoft said.

“Certainly the initial move is to capture more consumer eyeballs,” noted AMR Research analyst Jim Murphy. “Though it’s unclear at this point what the next version of Office will look like, it’s likely that it will include a mechanism for Microsoft or its partners to monetize its widespread use — whether that’s through advertising or selling other value-added services.”

Equipt For Enterprises?

Microsoft’s move to make Office a consumer-friendly online service has some long-term implications for the small-business market. Gartner Client Services Vice President Michael Silver thinks we’ll “see more subscription offerings from Microsoft as time goes on” because it would give the software giant a “more reliable” revenue stream.

The software giant’s latest move basically adapts the model of Microsoft Software Assurance for enterprises to the home market, Silver said.

“Larger small businesses already have offerings like this through Microsoft’s open-licensing program, but the pricing and licensing is more commensurate with prices businesses pay,” Silver said. “Small businesses can probably expect something like this suited to them in the future, but may have difficulty buying this version in particular because it does not contain Outlook.”

The terms of the current consumer license will prevent a small business from using Equipt, Silver noted. “Microsoft says that business use of Equipt is prohibited,” he said.

Way More Functional

When Microsoft eventually does offer a similar model to small-business users, it could cannibalize the software giant’s existing subscriber base. However, Murphy said that is largely expected under a SaaS (Software as a Service) model.

“It would indeed represent a disruption in the way Microsoft has typically in the past collected revenue from businesses,” Murphy said. “My sense is that Microsoft will offer subscription-based pricing for small businesses, and then medium businesses and large businesses. But they’ll still offer traditional pricing models for the companies that are accustomed and comfortable buying this way.”

Consumer subscribers to Microsoft Equipt will also get the latest upgrades anytime a new version of Office or Windows Live OneCare is released. “Equipt is targeted at consumers and the annual fee allows up to three PCs in a home to use it, just like the regular Office home and student licenses,” Silver said.

Silver noted that new-version rights have always been included for enterprise Software Assurance subscribers.

“Of course an issue here is that users of new online tools — like Google Docs, ZOHO and others — also get new versions as they come out, and they don’t need to install anything,” Silver noted. “However, online tools sort of ‘force’ the upgrade because users have no control over them, and Microsoft Office is way more functional.”