There has been much online speculation about how Microsoft is going to head off the Google Apps free office software attack, much of it focusing on an advertising supported version of Microsoft Office. While this may, at some point, feature in the Microsoft strategy it is not going to appear any time soon. Microsoft Works SE9 most certainly will, in fact it is here already.

A pilot program, albeit a very small one, has been started to test the workability of the advertising supported model and Microsoft has confirmed this. The pilot is expected to last well into next year, and consist of a relatively small closed group of testers. There are no plans or the ad-supported version to be made available for public Beta testing. Just as there are no plans to make it available as a web powered or online application. According to my sources, Microsoft Works will remain firmly anchored to the desktop, it is just the revenue methodology that will change.

The concept is nothing new as such, although obviously it is a whole new ballpark for Microsoft to be playing in. Every time the user fires the software up, and an Internet connection is present, advertising content will get updated. These adverts being displayed whether you disable your Internet connection or not. Expect there to be some mechanism to prevent usage if an Internet connection to update the adverts is not made over a given timeframe.

What you cannot expect, however, is the use of Google-alike contextual advertising via text analysis. Instead, Microsoft is insisting that its advertising will be entirely based on user demographics of the Works product line. It will, of course, both serve and track the adverts using a Microsoft advertising platform, and generate revenue this way.

I am not convinced that Microsoft has grasped the real issue here though, the threat that web driven applications pose. Instead of starting from scratch and looking to tackle Google head on, it has chosen the easy option of rolling out an already dated and, importantly, dirt cheap desktop product and making it a free option. This does nothing to stem the flow of interest in Google Apps or OpenOffice, all it does is leave the watching world with the very real impression that Microsoft is creating competition within its own product line.

C'mon Microsoft, be daring, take a chance and innovate. Where has the passion that got you to the top of the software tree gone? Morph Microsoft Office into a truly online delivered experience, with options for ad-sponsored or subscription versions, and ensure that your dominance in this market continues. Or you could continue to plod along with your head in the warm and profitable sand, until such a time as the wave of web applications washes it away leaving you exposed and naked, unable to play catch up.