Microsoft just took a huge gamble. A mega big one. And I’m not sure if they’ve already lost.

Let me start with the background. A few months ago, they announced Microsoft Surface, a shiny Lumia blue tablet thing (apparently it’s hit production problems already – who’dathunkit?)

Today, they announced that Windows on ARM – you know, WinRT – would “include” Microsoft Office. What does “include” mean? Is it included in the price, is it ad supported, like Office 2010 Starter? Or will it require an Office 365 subscription in order to use it? I think the last of those is the most likely – I can’t see Microsoft shareholders being happy throwing away the billions Office historically brings in.

Now there are several interesting implications here. The first is that the Surface does well, but people don’t want to pay for Office. (Think students for example – $20 a month for Office? Sheesh, why didn’t I buy an iPad? That’s marketing you don’t want…)

So what’s the alternative? Microsoft could take a leaf out of Apple’s book and ban anything that competes with Office from the Surface app store. After all, Apple do this already – wifi hotspot apps and competitors to Safari are already banned. (That last one’s kind of OK though – Safari is free, and they can argue that their prescription only refers to installing other rendering engines. If I’m losing you, think security – you’re reducing the number of doors in the fortress the attackers can come through.)

So could Microsoft restrict competitors to Office from their app store? It’s possible, but I can imagine that the anti-trust / monopoly regulators would be awake and snarling very quickly. It’s Windows, and there’s already a plethora of other office suites out there – conversion to Windows RT would be much simpler than to, say, the iPad (and there are already several competitors to Apple’s iWork suite on the Apple app store, and they all seem to play quite nicely, thank you.)

Maybe that’s out. They’re not going to give Office away, that’s for sure. And that leads to the interesting possibility of an anti-Surface backlash almost immediately – “I paid HOW MUCH for this and I have to pay HOM MUCH EVERY MONTH???!?”

Microsoft might counter that you only get Office with Surface. But it wouldn’t be too much of a stretch to expect that the others will follow suit. Apple could start giving away iWork. But the landmine MS have to avoid is this: Google just bought QuickOffice. What happens if they start giving that away in the Play Store, or including in on the Nexus 7? If I were Steve Ballmer, I’d be worried about that. I’d be worried that I’d just promised away billions of dollars of revenue in six months time only to see my two biggest competitors start undermining me in three.

The gamble, then is this: Office on Surface sounds cool. But by the time it actually comes out, will it actually be a case of “too little, too late”?