Microsoft Ponders Free, Ad-Based Web Apps

Redmond software giant Microsoft Corporation said on Thursday it is considering offering Web-based, ad-supported versions of its word processing and spreadsheet applications for free to turn entry level users on to Microsoft’s applications and technologies, as the company considers how to compete with the growing slate of free applications being offered by rival Google.

Microsoft has never been keen on giving away version of its flagship productivity applications, but Google’s free online applications offerings—including word processing, spreadsheet, calendar, and other tools—offer enough power to keep entry level and basic users satisfied. So, Redmond is beginning to ponder offering ad-supported, online versions of some of its core tools—like its Microsoft Works application suite—possibly under the Windows Live brand. Offering free, web-based versions of its applications might let Microsoft tap into customers who would not otherwise purchase Microsoft applications, as well as supplement the company’s growing efforts to increase revenue through online advertising.

Currently, Microsoft’s Office application suite accounts for roughly a quarter of the company’s revenue. Microsoft Works, a stripped down application suite with basic word processing, spreadsheet, and communications functions, retails for about $50 and is shipped as a pre-loaded application on many new computers.