Microsoft is to offer a free anti-virus and security solution from the second half of next year.
It will stop selling OneCare, its all-in-one security and PC management service, from the end of June 2009.
The new software, code-named Morro, will be a no-frills program suited to smaller and less powerful computers.
The software will be free to download and will support Windows XP, Vista and Windows 7.
The BBC reports the move comes as sales of the OneCare subscription service are flagging - reportedly because the anti-virus marketplace is already flooded with big-name players such as Symantec and McAfee.
Since its launch in May 2006, OneCare has garnered less than 2% of the security software market share.