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#Digitalskeptic: Microsoft Flirts with Free Software

NEW YORK ( TheStreet) -- Nikkia Carter figures the best shot at making money selling Microsoft Office 365 is to give it all away.

"It does not help me get revenues," Carter told me over the phone from her King George, Va., office. She owns Carter-McGowan Services, a software development and training shop that's manages the coding needs of small and nonprofit firms.

"It helps me get more seats so Microsoft (MSFT - Get Report) will start referring me more leads," she said. "And that drives my services business."

McGowan, a wily former Booz Allen Hamilton technology consultant, is riding a peculiar wave surging from software giant Microsoft: Low or no-cost versions of flagship software products that are offered in the hope of driving other businesses.

Carter says that, starting about a month ago, she took advantage of new, free pricing options from Microsoft that allowed her to give away powerful versions of Office 365, Redmond's red-hot by-month subscription-based Web riff on Windows. Though most of her new clients are smaller nonprofits and educational institutions -- no enterprises or bigger firms yet qualify for the free deal from Microsoft -- Carter was unabashed about her expectations of giving away Microsoft's once-costly software.

"Once I get a company set up, then I can really be a resource," she said. Office 365 will make her no money as a product. Rather, it connects her to customers so she becomes the logical choice for Web-hosting services, business consulting and other by-fee packages

"I have to be very efficient about what I charge, but that is where the money is these days."

Microsoft out. "Micro-service" in
It is no secret that Carter's software-as-loss-leader worldview is shared by MIcrosoft's top brass. This year at the Worldwide Partner Conference, where Microsoft resellers from more than 160 countries descended upon Houston to get the straight dope from then-retiring CEO Steve Ballmer, the new "software ain't worth what it used to be" mantra was clear.

"About a year ago in our annual report, we talked about the move from being a software company," said Ballmer in the event keynote, "to a devices and services company."

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