Microsoft says the number of consumers that are signing up to the subscriptions for paid anti-virus has been flat and roughly half have no up-to-date security software.
Dubbed "Morro", the software will tackle viruses, spyware, rootkits and Trojans, but will lack utilities such as parental locks found in commercial security products, according to the BBC.
Security software producers have said they do not see Morro as a threat, but some reports say investors are concerned that Morro will hurt sales of commercial products.
The Morro trials come three years after Microsoft entered the security software market with Live OneCare, which was not a commercial success.
Microsoft has said it will discontinue the Live OneCare service when Morro is released, which is expected to be before the end of the year.
This story first appeared on Computer Weekly: http://www.computerweekly.com/Articles/2009/06/15/236419/microsoft-plans-to-release-free-security-software.htm