Microsoft has quietly set the stage for a revolutionary change in pricing for Microsoft Office for individuals and small businesses.

Office (Word, Excel, Outlook) has traditionally been so expensive that most people used the version that shipped with their new computer, and never upgraded it. Many of you have never seen Office XP/2002, the current version – which has many nice improvements, especially in Outlook, but which isn’t worth the upgrade cost for most people.

Last year Microsoft started selling the “Students and Teachers Edition” of Office XP in normal retail outlets – exactly the same suite of programs but at a steeply discounted price. The Student Edition of Office 2003 will be promoted even more heavily, with two important licensing changes:

The license will cover purchases by parents of students or children under age 18 – meaning more people buying the Student edition will be using valid licenses.

And, importantly, the Student edition can be installed and used concurrently on up to three computers.

So a single inexpensive purchase conveys a valid license for an entire household. And a business can economize by buying a few of the Student editions, although the licenses wouldn’t be valid if anybody checked. Microsoft expects the Student Edition of Office 2003 to be its retail sales leader going forward.