Less than four months ago, Microsoft launched a public beta test of its Office Live service, a basket of online treats for small businesses. Ultimately, Microsoft wants to make Office Live an enterprise-friendly source for online business applications (20 such applications are included in Office Live Essentials).

But in order to get customers in through the door, Redmond is offering a gift to anyone who will sign up. Passing over the usual choices of a George Foreman grill or a DustBuster, Microsoft's freebie is a domain with hosting and e-mail (a $35 value!). The entry-level service, Office Live Basics, consists of nothing but the domain and hosting (2GB e-mailboxes, 30MB of site storage, 10GB per month of data transfer), and not only is it free during the beta test period, it's slated to remain free afterward.

	Passing over the usual choices of a George Foreman grill or a DustBuster, Microsoft's gift was a domain with hosting and e-mail (a $35 value!).

Predictably, the service has been a rip-roaring success. At last count, Ipwalk's Office Live Watch Page placed the subscriber count past 83,000 domains, up about 9,000 from the previous week. If the trend line continues its upward climb, it should pass the 100,000 mark by next month. And these figures are just from U.S. customers signing up for a trial program. Office Live isn't even a real product yet.

A service like this is a real kick in the teeth to Yahoo, which for several years has been selling a similar small-business hosting service for between $12 to $40 per month. In fact, Office Live should send a wave of nausea through the registration and hosting business in general. There's nothing like extreme undercutting to steal casual customers, and you can't beat a discount like Office Live's.

DOS Live and Internet Explorer Live
Of course, this isn't the first time Microsoft has tried to dominate a market by giving away its product. As recently as, oh, 1994, an upstart company called Netscape introduced a Web browser that could display pictures and text and support plug-ins to handle other media types. Though it was free to individuals and nonprofits, Netscape Navigator carried a pretty steep corporate licensing fee. Naturally, Microsoft thought that it could do better, so it introduced its take on Web browsing, the first iteration of Internet Explorer at the knock-down price of nothing and waved Netscape Navigator good-bye.

Office Live should send a wave of nausea through the registration and hosting business in general. There's nothing like extreme undercutting to steal casual customers.

And this was just a rerun of a previous product introduction from the very early 1980s, when most people with personal computers built them from kits, bought an operating system called CP/M from Digital Research and a programming language from Microsoft, and then wrote their own programs. After a few years, this geeky hobbyist market drifted towards the corporate world as IBM was poised to introduce a creature called the PC. Microsoft snapped up a CP/M clone called DOS from a small company and offered it to IBM as a package deal with their BASIC programming tool. Thus was born the era of the personal computer. Sure, people could buy Digital Research's operating system if they wanted to (on features and performance, DR-DOS continued to beat the pants off MS-DOS for at least a decade), but only the truly geeky would spend money on an OS when they also got one for free with their PC.

Microsoft has a history with this tactic, and it's well known for its ruthlessness in pursuit of destroying the competition. So are Web site hosting services such as GoDaddy, Yahoo, and WebHero quaking in their boots about the introduction of Office Live? And if not, should they be?

Getting what you pay for
On a feature-for-feature basis, Office Live Basics (the freebie in the batch) is no match for any paid hosting site or bundled hosting from a premium-priced registrar. Its paint-by-numbers, template-driven design process steps you through page creation in a pedestrian, if highly graphical fashion, but it does shine in one area: its rather dandy drag-and-drop support for placing elements on a page.

	Once you're hooked, the basics will start to cost you.

That said, anybody who ever looked at a Web site they liked and thought, "I'd like to make one like that," will probably be frustrated by the rigid interface and will be disappointed by the results--unless they happen to like five-page, ultrabasic HTML sites. You can substitute this interface for FrontPage if you wish, but FrontPage tends to make poor-quality HTML. FrontPage's only advantage is that it's not Microsoft Word 2003, which, when it saves documents in HTML format, creates so many redundant Span text formatting commands that the code view becomes almost undecipherable.

Movin' on up
Of course, Office Live is all about distributing online applications, and the part of the service that will be rented out when Office Live goes live later this year is full of handy little applets. There are collaboration tools, accounting elements, and a whole mess more that CNET has covered in depth in its preview of the service.

Going forward, Microsoft will want to keep as many likely upgrade customers onboard as it can. But for each year that its customers maintain a domain registered with Office Live Basics, Microsoft will have to pay about $6 to Network Solutions for registration fees and costs for network storage and online access. This isn't outrageously expensive to a company overflowing with money, but Microsoft's shareholders may not feel too blissful about shouldering 100,000 or more domains for freeloaders.

I've seen free domain programs come and go over the past decade, and the ongoing costs always tend to curb the generosity of the company that's throwing the party. Microsoft's deep pockets notwithstanding, the freebies can hardly go on forever--or extend to multiple domains per owner. Once you're hooked, the basics will start to cost you. It'll be interesting to see how many customers who will never need the paid Office Live Essentials and its collaborative online tools will want to stick with Office Live Basics once the fees kick in.

As for me, well, let's just say I stuck with DR-DOS through those lean MS-DOS 3.x and 4.x years and gave Firefox a hero's welcome when it appeared. And some things never change.

If Matt Lake's so smart, how come he can't give away 100,000 domains in four months? Throw in your two cents' worth in the feedback section below.