Just when we thought Microsoft could not possibly lose any more direction as a business software publisher they find a way, in form of Equipt:

Initially code-named “Albany,” Microsoft Equipt offers consumers Microsoft Office Home and Student 2007, giving them the latest versions of Word, Excel, PowerPoint and OneNote for their personal and school projects; Windows Live OneCare, the all-in-one security and PC management service; Windows Live tools, such as Windows Live Mail, Windows Live Messenger and Windows Live Photo Gallery so they can connect and share with people they care about most; and Office Live Workspace, a new service from Microsoft that makes it easy to save documents to a dedicated online Workspace and share them with friends and classmates. Anytime a new version of Office or Windows Live OneCare is released, Microsoft Equipt customers will get the version upgrades as part of their subscriptions.

But is this just another distraction from the core Microsoft business, or is this a brilliant ploy to leapfrog the competition in the consumer space?

In short: Microsoft is trying to extend its desktop monopoly to include the Office and Service Subscription monopoly by bundling it’s Office Home, OneCare Antivirus and a bunch of freeware found on its web site. Why? The ploy to get OEMs to install a trial version of Office on brand new PCs backfired when customers realized they were tricked into using the new drug but didn’t quite want to pay for it! So they went back to the old releases.

This move does four great things for Microsoft:

1. It reassures the retail channel that it can continue to be relevant in the Cloud Services world because the package will be distributed in a retail setting leading to more store visits and ability to get some direct retailer IT services traction (Geek Squad, FireDog, etc)
2. It creates a proof of concept for Software-as-a-Service model for Microsoft, extending beyond the free ad sponsored software solutions that have by large been loss leaders for both Microsoft and Google.
3. It creates a track record of demand from the customers in the area where regulators are less likely to be skeptical of Microsoft’s actions. While this kind of a “bundle offer” would lead to immediate lawsuits if it included things like Exchange and SharePoint (which require other purchases and more complex licensing), not too many people seem to be focused on the consumer retail space where Microsoft can try out its “bundling” effect and later claim consumer demand, not anticompetitive greed, as the main driver.
4. It changes the licensing message from “Right to use” to “Install it on three PCs, we aren’t going to threaten you by calling you a pirate!”

All in all, good move Microsoft! I doubt anyone will notice what is really going on here.

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