Microsoft (MSFT) dominates the markets in which it competes. Microsoft dominates the operating system markets where Windows has 75% of the PC market share. It also dominates he business productivity market where Office has 95% share by our estimates.

Microsoft competes with Apple (AAPL) and open source players like Red Hat (RHT) and Novell (NOVL) that support Linux distributions in operating systems, and with Google's (GOOG) Apps suite of products, Adobe (ADBE), IBM (IBM) and Oracle (ORCL) in business productivity.

Over the weekend, I saw an interesting item over at CNET about Cisco (NASDAQ: CSCO) wanting to up the competitive ante against Microsoft (NASDAQ: MSFT). Cisco is investing in its WebEx conferencing technology to make it more valuable. According to the article, it seems as if Cisco may want to go after some of the market that is served by Microsoft's Office suite. The company will do this by offering up applications devoted to document and spreadsheet needs.

Microsoft (NASDAQ: MSFT) wants to expand the reach of its vital Office suite of products. The software giant wants to utilize a subscription model for the collection of programs. The initiative will commence later this month at Circuit City (NYSE: CC) and it will eventually reach other retail stores. People will also eventually have the option of accessing the subscription product via computers such as ones made by Dell (NASDAQ: DELL). The cost is reported to be $70 for twelve months of Office access.

This is an interesting scheme. As the article points out, businesses might not bat an eye at subscribing to software applications, but for consumers, this is a different ballgame. Many of us, myself included, are so used to going down to a Best Buy (NYSE: BBY) to purchase a software package for a flat fee that paying yearly dues just seems like an alien concept. And I'd say this goes double for something as large and complex as the Office program. Microsoft believes that $70 on an annual basis will be perceived as cheap and will expose consumers who might normally either seek upgrades on a pirated basis or who would simply continue using older versions to regular approved updates. It is a large investment, after all, to upgrade to a new iteration of Office.

Microsoft would be wise to market the heck out of the subscription model for Office, taking full advantage of the inflationary environment we are currently in. If potential users can be convinced of the value proposition, then they could eventually become hooked on the promise of upgrades over time for the relatively economical price indicated. Checking around on the net, I notice that a lot of the negative comments about this idea center on the fact that there are already free alternatives out there to Office, such as applications offered by Google (NASDAQ: GOOG).

In a move to counter Google (NASDAQ: GOOG), Microsoft (NASDAQ: MSFT) will move some of its key Office funtions online so that they can be worked on using multiple PCs.

Douglas A. McIntyre is a partner at 24/7 Wall St.

With many returning to work today after a Labor Day break, The Wall Street Journal [subscription required] reports that where employees park reveals interesting insights about what companies and their employees value. In some companies, closer to the elevator is better. And management decides who gets to park closest -- although the winners in that competition vary among companies. And for some employees, the longer the walk to their desk, the better their health.

Simply put, the companies and employees described in this article have six parking lot values:

• Sales performance. Dave Beckman is the top sales executive at 200 employee San Diego, CA equipment-leasing company, Five Point Capital Inc. For the past two years, the 27-year-old's midnight-blue, 2006 Porsche 911 is parked in the spot closest to the its main entrance -- a perk the company awarded him for his strong sales performance. This makes his colleagues jealous and, the company hopes, will spur them to sell more so they can take his spot.
• Organizational rank. Although they're often empty since their occupants are at meetings away from the office, 12 spaces are allocated for top managers at MSW Research Inc. Those empty spaces are painful reminders for other employees that the company puts a distinctly lower value on the time of rank and file workers than it does on its executives'.

Note: The Daily Option Update is provided by Options Specialist Paul Foster of theflyonthewall.com.

Volatility Index S&P 500 Options-VIX down .14 to 10.28.

Amazon.com Inc. (NASDAQ:AMZN) - puts more active than calls as prices increase on purchase for Hedges. Amazon was trading up .71 to $38.38 around 2 p.m.. Amazon is expected to report EPS of $0.22 after the close. Lazard has a Hold rating on Amazon said on 1/31/07, "At current price levels, we believe the stock largely discounts strong growth, operating margins expansion, and improving free cash flow generation." Amazon call option volume of 43,043 contracts compares to put volume of 60,717 contracts. Amazon February option implied volatility of 58 is above its 26-week average of 39 according to Track Data, suggesting larger price fluctuations.

Neurochem Inc.'s (NASDAQ:NRMX) May option implied volatility keeps Climbing into Spring Risks. Neurochem issued a press release this morning indicating results from the first phase 3 study of NRMX's Alzhemed for the treatment of Alzheimer's disease is expected in the spring of 2007. Neurochem and partner Johnson & Johnson (NYSE:JNJ) have a PDUFA date for Kiacta for AA Amyloidosis on 4/16/07. Neurochem call option volume of 4,859 contracts compares to put volume of 5,129 contracts. Neurochem May call option implied volatility is at 152; puts are above 211 according to Track Data, indicating large price fluctuations. NRMX puts are expensive because Neurochem is difficult to borrow.

Option volume leaders today were: Altria Group Inc. (NYSE:MO), Google Inc. (NASDAQ:GOOG), Equity Office Properties Trust (NYSE:EOP), Bristol Meyers Squibb Co. (NYSE:BMY) and Sepracor Inc. (NASDAQ:SEPR).

Microsoft Corp.'s (NASDAQ:MSFT) MSN and its other online businesses used to be a pretty big deal. They sat at the top of the pack with AOL and Yahoo! Inc. (NASDAQ:YHOO). That was before social networking and video sharing and ... Google Inc. (NASDAQ:GOOG).

Microsoft has brought in new blood to try to resurrect its fallen online operations. But it may take more than a transfusion to get the operations back on their feet.

There is some concern at Microsoft that it became overly focused on online software, like mapping, functionality, while allowing marketing to go to hell.

Microsoft really has three online initiatives but they may not be able to all exist together. There is the old portal business that competes with the likes of AOL and Yahoo!. There is a home grown search engine that competes -- though not very well -- with Google. And there is the Microsoft Live business that helps tether users of Windows and Office to the Internet and get additional interoperability and functions for software that is installed on PCs.

It could be argued that the search feature is the core of the online connection of Office productivity software and Windows operating system users. It is part of the overall efficiency of the Internet. So, search and Live can probably live together and be part of the same overall operation.

This leaves MSN, which has little to offer beyond what users get from AOL and Yahoo!. Since most of the services from these "portals" are free, MSN has to count on advertising revenue to fuel its income. And, as Yahoo! investors have found out recently, that is easier said than done.

Microsoft has two promising online businesses and a portal operation that is running far out of first place in that segment of the market.

Maybe AOL or Yahoo! would buy MSN. It is hard to see what Microsoft should do with it.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Why do they call billionaire Sam Zell the "Grave Dancer"? It's simple. Sam Zell is in the habit of taking dying cash cows and reviving them. He's been well-rewarded for his efforts, and justly so. You just have to respect a man who is willing to grab up a limp handed property interest and make it viable again. Second only to our federal government, Sam Zell via EOP, could be considered the single largest property holder in the United States.

Sam Zell is chairman of Equity Office Properties (NYSE:EOP) This real estate investment trust owns and manages more than 600 office buildings in about 16 states. EOP focuses on metropolitan areas as its target regions for acquisitions. Equity Office was founded by Sam Zell in 1976 in the form of a real estate management and acquisition organization. The company was taken public in July 1997.

Equity Office has continued to grow in size through acquisitions. Since 1997 EOP has added to their stable; Beacon Properties Corporation, Cornerstone Properties and the Spieker Properties Inc. among others.

On Nov. 19, 2006, Equity Office Properties Trust announced a merger agreement that states they shall be acquired by Blackstone Real Estate Partners, in a transaction valued at over $35 billion. Blackstone agreed that, after the merger, it will liquidate the surviving corporation in the merger into a Blackstone affiliate.

EOP stated in a press release: "In the liquidation, each holder of a share of the 5.25% Series B Cumulative Preferred Stock will receive $50.00 per share in cash plus any then accumulated but unpaid dividends, and each holder of a share of the 7.75% Series G Cumulative Redeemable Preferred Stock will receive $25.00 per share in cash plus any then accumulated but unpaid dividends."

The Blackstone Group, founded in 1985, is focused on investing in office buildings, hotels and other commercial properties.

According to a Reuters story, Microsoft Corporation (Nasdaq: MSFT) is thinking about launching a free online word processor and spreadsheet suite. The business model would be based on ads.

After all, Google is making headway with its own applications – Writely and its new spreadsheet. Of course, there are other upstarts offering online suites.

Interestingly enough, Microsoft may use one of its old products (which has had little traction over the years): Works. This is desktop software that is usually pre-installed on new PCs.

This is definitely a tricky thing for Microsoft. The problem, of course, is protecting the Office monopoly, which accounts for about a quarter of Microsoft's revenues.

Why pay for it if there is a free version?

The good news is that – at least for the business market – its hard to see an ad-model working. Do businesses want their employees to get bombarded by ads? Probably not.

But the consumer market is big, too. And with the competition from Google and others, it looks like revenues could get light on this side of the Office business.

Tom Taulli is the author of various books, including the Complete M&A Handbook and operates InvestorOffering.com.

After years of different versions, what can Microsoft do to get customers interested in its next version of Office? It has something that should get lots of attention: business intelligence (BI).

It's part of a new product – to be launched mid-year 2007 – called Office PerformancePoint Server 2007.

I remember when I first got my hands on a copy of Microsoft Word. After years on WordPerfect, the creative soul in me was drunk on the pretty way you could view pages as pages, not words separated by dotted lines, the user-friendly layout, and oh, the fonts. But now, I get my kicks off in-line editing and next-gen blog software and AJAX (it's the wave of the future, dontcha know).

According to Jason Calacanis, CEO of Weblogs, Inc. and attendee at the D conference, Bill Gates is still in love with his software product. Jason writes that Bill "demoed a very cool version of Office that had a very clean -- but still packed -- GUI. One thing I noticed while the demo was going on was  that Gates was smiling like a kid on Christmas. As the audience oooed and ahhhhed you could see him get more excited and smile more. I thought to myself, 'wow, this guys been building the same pieces of software for over 20 years and he is still excited about it -- that's pretty cool.' "

Jason's other big takeaway: Microsoft is about to create "storage in the sky" for your MS documents. Now that would be truly useful and a worthy rival to Gmail and, if it wasn't imitated by Steve Jobs in a hurry, an Apple killer. In the world where everyone's mobile, you can't keep your data on one machine.