Staunch competition has propelled software giant Microsoft [MSFT] to unveil plans for developing more online-based software, and although it carries a fee, the plan seems like a viable solution for a serious threat from free software. On Tuesday, Microsoft announced that it will begin selling a package of four products for consumers by the end of 2009 and the same package for business by the beginning of


Included in the server software package are Exchange Online, SharePoint Online, Communications Online and Live Meeting. Microsoft will sell the package for $15 per user per month, though a less expensive $3/user will be marketed for people who are not regularly connected to computers for their job. That service will only include Sharepoint and limited email access.

The announcement comes amidst a variety of software developments from companies such as Google [GOOG], IBM [IBM], and Salesforce [CRM] that are offering similar programs for free online.

Their programs run on cloud-computing software that enables them to host outside files on their own servers, with an added bonus of delivering product upgrades online. Conversely, Microsoft users have to buy new software to achieve a similar upgrade.

Although free is very enticing to many, the primary problem is overcoming the Microsoft brand name, something the software company is hoping will keep it atop the software sales charts.

It is yet to be seen whether free software packages will be able to overcome such a strong business branding, but Google’s integration of its software with Gmail, a popular business email platform, is making a strong push to be considered by businesses.

With Microsoft’s subscription service coming at a monthly fee, it may be just enough to keep its currently large base of users from converting to free similar software offered online.