Microsoft has quietly nixed plans for OfficeLite, a subscription-based version of its Office productivity suite designed for the consumer and education markets, according to company documents examined by CRN, a sister publication to InformationWeek.

In a March 3 memo to staff involved in the initiative, Cameron Turner, a Microsoft product manager, said the "OfficeLite effort has been shelved for the Office 11 time frame." OfficeLite originally was slated to ship with MSN 9, but that plan also has been "tabled," according to the memo. Turner also said in the memo that the project had taught Microsoft "several important things about creating nonperpetual versions of Office and working with MSN."

Turner couldn't be reached for comment.

However, in another memo on the matter last week, Joe Eschbach, corporate VP of Microsoft's Information Worker Product Management Group, said the OfficeLite effort was shelved primarily because the company decided to "more aggressively utilize the Students and Teachers Edition of Office as the consumer socket filler."

"This includes broad-based trial efforts for S&T for education institutions," Eschbach explained in the memo. "Once this decision was made, it became difficult to identify the unique target customer and price point that would make for a long-term sustainable business for OfficeLite."

Yet the groundwork done in the OfficeLite effort wasn't in vain, noted Eschbach, who joined Microsoft last summer from Adobe Systems Inc. That work constitutes "a great foundation for ongoing discussions about longer-term subscription offerings in conjunction with MSN," he said in the memo.

MSN, the Microsoft Network, is the software company's online service. Microsoft has been trying to position MSN to topple America Online as the preeminent consumer online community. In addition, Microsoft has been trying to get customers to move to subscription-based models for buying--and perhaps even renting--its software. Such a business model would provide a recurring revenue stream.

A Microsoft insider confirmed the authenticity of the Turner and Eschbach memos. The Microsoft source said it made sense to can the OfficeLite effort and concentrate on fewer stockkeeping units for Office.

The current retail Office XP offering is available in Standard, Professional, and Developer versions. There's also a lower-priced Standard edition for students and teachers that has the base Excel, Word, PowerPoint, and Outlook applications. The suggested retail price for that version is $179, compared with $479 for the Standard edition for new users. Upgrade pricing for the Standard edition is $239. The Professional edition adds the Access database, while the Developer version encompasses the Professional edition plus FrontPage, SharePoint Team Services, and other developer tools.

Microsoft is working to get the next version of Office--slated to be called Microsoft Office Systems--ready for release in June. Until recently, that product had gone by the name Office 11. At press time, no decision had been made about stockkeeping units and pricing for the upcoming Office version, according to the company.

Microsoft Office is by far the market leader in business-productivity applications, with more than 90% of the market. But some industry observers have said the Office franchise faces challenges, such as lingering customer dissatisfaction with Microsoft's new enterprise-licensing agreements--which many view as de facto price hikes--and company's increased willingness to use non-Microsoft applications.

Many users also feel there's no need to upgrade from their current Office version. All of those factors could give competitors such as Corel's WordPerfect Office and Sun Microsystems' StarOffice more traction in the market, observers said.

This article courtesy of CRN.