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Thursday, August 2, 2007 - Page updated at 12:00 AM

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Microsoft to add ads to version of Works

Seattle Times technology reporter

Some versions of Microsoft Works, the stripped-down word-processor, calendar and spreadsheet software that comes with many new computers, will carry advertising as part of a test program, the company announced Wednesday.

Beginning within the next few months, select computer manufacturers will preinstall an advertising-funded version, called Works SE 9, on new computers, said Melissa Stern, a senior Microsoft product manager. It will not be available as a download.

"We'll be evaluating this business model to determine if it is viable for our customers and partners," Stern said.

This is one way the company is trying to capture more of the $40 billion online-advertising market.

"I think this is a way to get some extra revenue out of a product that probably wasn't generating a lot of revenue before," said Matt Rosoff, an analyst with Directions on Microsoft.

Works 9 sells for $40 at retail but is effectively free to new PC purchasers. Microsoft charges PC makers a small licensing fee to put the software on new machines, but nothing compared with the estimated $80 to $100 Microsoft gets for its highly profitable Windows and Office products, Rosoff said. He noted that the company does not disclose the terms of its deals with PC makers, called original equipment manufacturers, or OEMs.

Stern said the purpose of the ad-funded version of Works is to make the software "more affordable for our OEM partners to offer this to our collective customers."

She said the program will display advertisements when Works is being used online or off. The ads will be based on what the users are doing with the software, not the content they might be typing into a word processor. So, for example, a Works template used to plan vacations would carry travel-related advertising. But the software will not scan your essay about puppies and then present doggy day-care ads.

Stern said the company designed the ads to be unobtrusive and take up only a small part of the screen, much less space than the banner ads on Microsoft's Web sites such as MSN.com and Live.com.

Rosoff expects to see Microsoft continue to experiment with online advertising.

"If this product proves to be very successful and advertisers like it ... we could see [Microsoft] trying it elsewhere," he said.

Benjamin J. Romano: bromano@seattletimes.com

Copyright © 2007 The Seattle Times Company

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