Microsoft Corp. said on Wednesday it will offer a free, advertising-supported version of its basic productivity software, Microsoft Works, as part of a test program with computers manufacturers.

The world's largest software maker has been pondering the future of Microsoft Works, its basic spreadsheet and word processing software, in the face of rising competition from Google Inc.'s suite of business software services.

Unlike Google Docs and Spreadsheets, which are delivered through an Internet browser, Microsoft plans to pre-install Works on computers and display advertisements stored in cache. The software normally retails for $39.99.

When a user connects to the Internet while using Works, that cache of ads will refresh, said Melissa Stern, a Microsoft senior product manager in the Office group.

The company plans to roll out the advertising-supported Microsoft Works SE 9 in a few months. Microsoft would not disclose either the PC makers with which it was working or the markets for the test program.

Google and other Internet rivals are threatening to topple Microsoft's dominant position in desktop software with software services delivered over the Web supported by advertising or subscriptions.

Microsoft Chief Executive Steve Ballmer has said the company needs to embrace the software as a service movement without abandoning its bread-and-butter desktop products. The company has invested heavily in its Web advertising business with the goal of building a powerhouse to rival Google.

One of the goals of the test program is to figure out if there is a viable business model for advertising supported software, Stern said.

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