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.
Another expert, however, questioned whether free Office 365 deals paid off for Microsoft.
Stephen Baker, an analyst with the NPD Group who specializes in tracking U.S. electronics retailing, saw the bundling as a direct response to Chromebooks, the low-priced notebooks powered by Google's free Chrome OS.
"I think that if the goal of the Bingbooks is to be competitive with Chromebooks, it needs Office," Baker said. "Chromebooks have an office suite attached to them. So if Microsoft wants to get consumers to choose a Bingbook, [a free] Office is important."
Baker used the term "Bingbooks" to describe the low-cost notebooks that rely on Windows 8.1 for Bing, a subsidized version of the OS that OEMS (original equipment manufacturers) are either given outright or charged a much smaller fee than in the past. Hewlett-Packard's Stream line, which starts at $199, is a good example of the devices Microsoft has promoted as Chromebook killers.
Microsoft has been concerned enough with Chromebooks' limited sales to counter the category, much as it did when netbook sales took off in 2007.
Many of the so-called Bingbooks — and Windows tablets as well — come with a free one-year subscription to Office 365 Personal, the single-PC license that lists for $69.99 annually.
According to recent reports by Windows bloggers Mary Jo Foley and Paul Thurrott, Microsoft will include the year's worth of Office 365 for no extra charge to tablet OEMs. It's likely doing the same with notebook makers like HP.
"It's also a big challenge to get people to add another $69.99 or $99.99 for Office  when the price of the device is just $199," said Baker. "The whole concept of Bingbooks is to grab a very specific customer demographic. But people who are buying something like a Bingbook from a Windows OEM are just as likely to know Word or Excel as a brand as they are Windows. Those are all good, solid reasons to make a Bingbook include Office 365."
Jan Dawson, chief analyst with Jackdaw Research, agreed that in the short term Office 365 for free will sell more devices. But he wondered whether the strategy had legs.
"One of the ongoing questions is when Microsoft is trying to sell its own devices and go cross-platform at the same time, how do they set apart their own devices," Dawson said. "When Office was exclusive to Windows, it was clear what the value proposition was."
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