General talk about Microsoft’s Office Live offering has been floating around for about a year and a half now, and Microsoft has found some limited success in getting users to adopt the hosted service as their product of choice.

Now, Microsoft has fired a shot across the bow of the small business VAR by offering up a bunch of freebies to entice those very small businesses that many VARs rely on to butter their bread.

On Feb. 11, Microsoft relaunched Microsoft Office Live Small Business and collapsed the three tiers into a single product, which offers a great deal more services for free. The company hopes to entice a plethora of small businesses into the Office Live fold by offering everything from Web hosting to e-mail to remote storage for free. For VARs servicing mom and pop shops, that could be terrible news!

Those are the very services that VARs were once able to squeak a meager profit from when dealing with those mom-and-pop shops.

So what should those VARs do? Simply put, if you have a small business customer that considers Office Live Small Business a viable solution to their hosting needs, by all means, help that customer to setup using those free offerings from Microsoft but be sure to point out where the free offerings end and the charges begin.

Odds are that any tech savvy small business will outgrow the freebies. But, what about those businesses whose needs can be met by the freebies? Simply put, those businesses will need plenty of help setting up the free services and probably are not very tech savvy to begin with. After all, there is still a lot of money to be made with “hand holding."