Microsoft announced it may offer a free advertising-supported version of its basic word processing and spreadsheet software.
Microsoft, which dominates the market for desktop computer software through its Windows and Office franchises, has long resisted offering its software online.
But it faces a growing pack of Web-based competitors -- led by Google -- that is offering similar technology for free with a business model that makes money off advertising.
The world's largest software maker is now mulling how it can move Microsoft Works, a basic suite of business software that often comes preloaded on inexpensive consumer PCs, onto the Web as part of its growing stable of free online services.
Microsoft continues to roll out new online services under the Windows Live brand and it started testing Office Live, a software for small businesses to create e-mail accounts, Web sites and collaborate on projects.