Microsoft Office 365 for Students

The world’s largest software maker Microsoft Corp. (MSFT - Analyst Report) has announced plans to offer its subscription-based Office 365 software for students with up to six months of free access.

Office 365 is a cloud-based software suite officially launched in 2011. It is offered to customers in the software-as-a-service (SaaS) format.

Microsoft is offering students, with a qualifying .edu e-mail address, an opportunity to try Office 365 University for three months and 20GB of SkyDrive storage for free. Additionally, the company said that students who shared the offer on Facebook wouldenjoy another three months of free usage.

Management hopes to entice students with the latest Office, including SkyDrive’s cloud storage, a more touch-friendly design that works with tablets, touch-screen laptops and collaboration tools. The idea is to get them started on its platform, so they are more likely than not to make a purchase after the six-month trial period is over.

Microsoft’s Office 365 University comes with the traditional word processing, spreadsheets PowerPoint, OneNote, Outlook, Publisher and Access for a price of $79.99. It also offers 20GB of online storage via SkyDrive and 60 minutes of Skype calls per month.

Microsoft’s Office 365 is gaining traction in the market as it recently launched its online version focusing on touch devices. Further, it is being deployed at the stores of retailers such as J. C. Penney Company Inc. (JCP - Analyst Report) and U.K.-based Tesco as well as government departments, such as the Texas Department of Information Resources, which chose the software for inter-departmental activities. Recently, the International Federation of Red Cross and Red Crescent Societies (IFRC) also signed a MoU with Microsoft.

We believe Microsoft’s latest plan to offer Office 365 to students for a free trial is a great way to increase its presence in the education segment.

Currently, just like other PC makers, Microsoft is also battling the slump in the PC market caused by the sluggish economy. In addition, the popularity of smartphones and tablets from Apple (AAPL - Analyst Report) and Google (GOOG - Analyst Report) has been cannibalizing PC market sales, further deteriorating the scenario. Whether it can come out of the slump on the back of its new software and OS is a wait-and-see game.

As per research conducted by IDC, cloud-based services may grow into a $100.0 billion market by 2016, representing a compound annual growth rate (CAGR) of 26.4%. Cloud services are expected to drive growth in IT going forward, generating 41.0% of overall growth in IT by 2016. Thus, the strengthening of Microsoft’s position in the segment is encouraging, as the PC market is showing no signs of revival in the near future.

Microsoft has a Zacks Rank #3 (Hold).