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New Microsoft Works aims for suite spot

With the launch of Works Suite 2003, Microsoft is chasing productivity package buyers on a budget. Can the software recover from recent snubs by Dell and HP?

Microsoft on Wednesday launched Works Suite 2003, a new version of the software maker's all-in-one productivity package.

The new product comes as Microsoft seeks to recover from a double blow--the decisions by Dell Computer and Hewlett-Packard to stop carrying Works in favor of Corel's WordPerfect Productivity Pack on some consumer PCs.

While Microsoft waited until Wednesday to officially announce the new version of Works Suite, the product started appearing on store shelves late last month.

Works Suite is Microsoft's low-cost set of productivity applications for consumers not interested in the features or price of its Office XP package. Microsoft positions it as providing more value for money than Office; for example, Word 2002, which comes with Works Suite 2003, costs more purchased separately than does the entire consumer productivity suite.

In addition to a basic productivity package--a spreadsheet, database, calendar and address book--the Works suite includes other Microsoft-created applications: Encarta Encyclopedia Standard 2003, Money 2003, Picture It! Photo 7.0, Streets & Trips 2002 and Word 2002.

The new version sports a revamped Task Launcher, which opens to a list of activities and a calendar as well as buttons to launch programs. While the tasks listed lead to typical software functions, many of them are also tied to Web services offered by Microsoft or third parties: For example, clicking on the task "Car rental on the Web" will lead a user to rental car company Avis via the travel site, while clicking on the task "Photo gifts" launches the MSN Photo Web site.

Works Suite 2003 has a suggested retail price of $109, but some retailers already are selling the productivity package for much less. CompUSA is running a $35 instant-savings promotion that drops the price to $65 before Microsoft's $15 mail-in rebate. Staples sells the product for $80, before the mail-in rebate.

Suite pickings
The new product comes to market under the shadow cast by the Dell and HP defections. Starting in October, HP will carry the WordPerfect package instead of Works Suite on all Pavilion consumer PCs sold in North America. Corel expects to pick up 3 million additional users of WordPerfect, which competes more with Microsoft Office than with Works.

Still, not all PC makers have abandoned the Microsoft product. Dell continues to offer Works on some consumer models, as do Gateway and MicronPC. But as of Wednesday morning, all three computer manufacturers offered the older Works Suite 2002 to new PC buyers.

Microsoft also is looking for a better way to position the larger Office suite--which sells for more than some PCs--for the consumer market. Since October, Microsoft has sold an educational version of Office through major retailers at a price that is more than 70 percent less than the cost of the nonacademic version of the product. Costco, for example, sells Office XP for Students and Teachers for $128, in comparison with $400 for the same standard version.

Analysts say the widespread availability of the educational version to shoppers who don't need to show proof of being a student or teacher is a way for Microsoft to discount Office XP for the consumer market without actually dropping the price.

"There's no question, that's what Microsoft is doing here (with Office XP)," said NPDTechworld analyst Steven Koenig. "It's a price cut without cutting prices."