Shortly after announcing third quarter results, including a gain of 1.5 million subscribers, Microsoft made an unexpected move – it started offering the mobile version of Office 365 to consumers for FREE.Starting November 6, consumers can now download Office 365 for iPads, iPhones and Google Android devices for free. Moreover, users can now create and edit Word, Excel or PowerPoint documents and store them in the cloud – at no cost.Within a day of making the announcement, the mobile version of Word was the #2 selling app in Apple’s App Store. (For Android users, Microsoft is beta testing Office 365 mobile for Android tablets now, with an anticipated release sometime in 2015, followed by a smartphone version.)But what about users who had already subscribed to Office 365, paying an annual fee ranging from $70 to $100? Microsoft said it will issue refunds though there are, of course, conditions to those refunds. Consumers must have purchased Office 365 Home or Office 365 Personal on or after March 27, 2014 and activated the subscription before November 6. Refunds will be pro-rated, and must be requested by January 31, 2015. Businesses are not eligible for refunds.If consumers only want basic functionality of Office 365 for their iPad or iPhone, the free version will suffice. If they want to retain premium features and full functionality of Office 365 Home or Personal – including 1TB of OneDrive online storage and Outlook and OneNote – they will probably want to keep the premium version.As one can imagine, the refund will be a headache for the payment processing department at Microsoft. At the same time, the use of Microsoft Office software seems to be limited on mobile (with perhaps a greater uptick on tablets). Unlike consumer magazines that can charge more for mobile and tablet usage, SaaS providers may find that making software free on mobile and tablet platforms but charging for desktop access is a pricing model that works best with user experience.As we explained in our October 30 post, Microsoft is in this for the long haul. The company is willing to give up short-term profits and subscriptions in favor of long-term customer loyalty and retention. The more users it brings into the fold who become reliant on its products for personal use, the more leverage Microsoft has later when it rolls out product upgrades. As a Microsoft user myself, I’m a little concerned about being part of a captive audience, but with a billion other Office customers worldwide, I’m not alone.