Microsoft Preps Low-Cost Software Line

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August 11, 1998 (12:00 AM EDT)

Microsoft, quietly restructuring its consumer-software business, plans to launch two low-priced titles under the newly minted Microsoft Graphics Studio brand this fall, sources said.

The publisher, which now sells Microsoft Greetings Workshop Deluxe 2.0 and Microsoft Publisher 98 at retail, will release Microsoft Graphics Studio Greetings 99 and Microsoft Graphics Studio Home Publishing Suite 99 in September, according to sources. The Home Publishing Suite is expected to be available beginning Sept. 26.

The titles are the first to be developed under the Graphics Studio framework.

"We're definitely picking them up," said a retailer who was briefed on the titles and asked not to be identified.

"They needed a scaled-down title to go against [Corel] PrintHouse. They sell Publisher to small businesses, but now they're moving to the consumer market," the retailer said.

Consumer graphics titles, such as The Learning Company's Printmaster Premier and Broderbund's Print Shop Premier, are best-sellers at retail, according to market researcher PC Data, in Reston, Va.

For the week of July 5, for example, Printmaster Premier and Printmaster Gold Deluxe occupied the No. 3 and No. 4 best-selling software slots in the non-games category in the retail channel, second only to Windows 98 and Microsoft Plus 98, according to PC Data. One week earlier, Broderbund's Print Shop Premier was the 10th best-selling title for that same category.

The Learning Company, which recently moved to acquire Broderbund, plans to continue both Printmaster and Print Shop, The Learning Company chairman and CEO Michael Perik told analysts last month. He said the company would differentiate the lines by price or distribution channel.

As evidenced by its development of additional productivity, sports and entertainment software titles, and hardware offshoots such as a 900-MHz telephone and speaker system, Microsoft's investment in the consumer market is steadily increasing.

However, the category won't contribute significantly to the company's bottom line, considering Microsoft generated $14.5 billion in companywide sales during 1997.

Nevertheless, it will boost Microsoft's image in the consumer market, analysts said.

"It's a very hot category," said Seymour Merrin, president of Merrin Information Services, in Palo Alto, Calif. "But I'm not certain about the economics."

"Microsoft has been looking for years to expand the range of offerings in the home software market," said David Goldstein, president of Channel Marketing, in Dallas. "Microsoft has a stong brand name in the consumer market and will continue to leverage that."