Does Microsoft need a value menu?

Microsoft has been tight-lipped about the "Albany" product that it has just started testing, but ZDNet blogger Mary Jo Foley hears it might be a consumer bundle that includes Windows Live OneCare, Office Live Workspace, and Office Home and Student Edition.

The product, which apparently also goes by the name "ValueBox" may be an attempt to beef up the consumer version of Office amid stepped-up competition from Google Docs and other free and online competitors.

It strikes me, though, that Microsoft may be looking at ways to protect the Home and Student version of Office, a product that has been a huge seller at retail ever since its introduction as the Student and Teacher version back with Office XP in 2001.

Since Office Live Workspace is already free, the main addition to the Office box would be Windows Live OneCare, Microsoft's consumer antivirus product. Although it carries a $50 list price, it can often be had for far less either at retail stores or online. How much this would add to the product's appeal is unclear, though antivirus is also one of the biggest areas where consumers shell out for boxed software.

Microsoft has confirmed that it sent out invitations seeking testers for Albany, but has declined to offer any details about the product.

The testing of Albany, though, is not occurring in a vacuum. The company had previously said it was looking into the possibility of an advertising-funded productivity suite based on its Works franchise. Some inside the company have been pushing that approach for some time.

Microsoft may, however, now be rethinking whether it makes sense to have two separate productivity suites for the home at all.

Works has historically been a separate product from Office, although Microsoft has at times brought the two products closer together. One bundle of the product, known as the Works Suite, includes an older version of Word as part of the product, along with Works' separate tools for things like databases and spreadsheets. Microsoft has not updated Works substantially in some time, with the product overdue for either upgrade or replacement with Office Home and Student, were Microsoft to go that route.

Any decision on the future of Works would have to look beyond the retail channel, however. Although Office Home and Student is the big seller on store shelves, Microsoft has historically used Works as a product that computer makers can pre-install on new machines, though such deals generate only a couple of dollars for Microsoft. These days, new PCs also come with a trial version of Office. With direct sellers like Dell, Microsoft also has an option called Office Basic that includes Word, Excel, and Outlook.