The impetus behind Microsoft’s and Yahoo’s fervent courting of the SMB market with freebies is simple: There is a huge, untapped number of small businesses, the majority of which aren’t online.

Between Microsoft’s new freebie, Office Live Small Business tools, and Yahoo’s recently announced all-you-can-eat free Web site hosting buffet, you’re a fool if you reach for your wallet when it comes to getting online.

"It is unbelievable what is out there, free, on the Web," said Laurie McCabe, an analyst for AMI. "For project management, for CRM. Do a Google search for whatever you want, plus free, plus online service, and you’ll probably find a free online service."

The impetus behind Microsoft’s and Yahoo’s fervent courting of the SMB (small to medium-sized business) market with freebies is simple: There is a huge, untapped number of small businesses, the majority of which aren’t online. In the United States alone, analyst firms such as IDC and AMR peg the number of small businesses—i.e., those with fewer than 10 employees--at between 15 million to 20 million. An estimated 50 percent of those small businesses don’t even have a Web site.