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Microsoft trims Office prices

The software giant is cutting the store price of Office XP products by 15 percent to 30 percent, a day after it changes licensing terms that raised a storm of protest.

Microsoft plans to announce price cuts for its Office productivity software on Wednesday, a day after it eased controversial licensing plans for Office and other products.

The price cuts are for the full retail versions of Office XP "suites," which package common applications such as a word processor and spreadsheet program, and for individual applications.

The Office XP Professional package is now priced at $499, compared with $599 previously. Office XP Standard will carry a price tag of $399, down from $479. Standalone versions of Office applications--Word 2002, Excel 2002, PowerPoint 2002 and Access 2002--will sell for $229, compared with $339. The new prices go into effect Wednesday in the United States and Canada.

Microsoft is expected to deliver the next version of the software, Office 2003, in a few months. Dan Leach, Microsoft's lead product manager for the software, said the Office XP reductions are likely to be reflected in the retail pricing of the upgrade.

"We don't expect prices to change for that product, based on these new prices," Leach said.

The price changes do not affect volume licensing plans used by most businesses, although Microsoft announced Tuesday changes to those licensing terms to mollify customers. Clients who sign up for the "Software Assurance" will get additional services, such as support and training resources, included in the cost of the software.

One new bonus allows business customers to choose "home-use rights" for Office products, allowing employees to legally install the same copy of the software on both home and work PCs.

Leach said the changes in retail pricing reflect that move, which lets many business users take the software home for free. "We want to make sure people who don't have that opportunity also have options to save on the applications they need," he said.

The new retail pricing for Office XP also does not affect the educational version of the software, intended for use by students and teachers. Microsoft introduced Office XP Standard for Teachers and Students last year and has been unusually liberal in deciding who qualifies to use the product, which sells for $149--$330 less than the price for the regular edition.

The educational version quickly outsold the regular version of Office XP by a wide margin, with analysts casting the move as a way for Microsoft to make the software more accessible to consumers without making a price cut that could undermine profits from business customers.