Microsoft won't guarantee buy-not-rent Office for next decade

Office executive swipes at Adobe's subscription-only model, but company backs off his apparent promise to keep selling perpetual licenses for 10 years

Microsoft yesterday took a swipe at long-time partner Adobe for the latter's wholesale shift to rent-not-buy software subscriptions, and along the way seemed to promise it would continue to offer Office as old-school perpetual licenses for the next 10 years.

Today, however, Microsoft declined to put that in stone.

The newest versions of the suite, Office 2013 on Windows and Office for Mac 2011 on OS X, are available both as "perpetual" licenses -- the traditional kind that customers pay for once and up-front, then use as long as they like -- and via subscriptions through various Office 365 plans.

Microsoft will continue to offer both payment and licensing schemes, said Clint Patterson, director of communications for Office, in a Tuesday blog, rather than go all-in, as Adobe has, on subscriptions.

"Like Adobe, we think subscription software-as-a-service is the future," Patterson wrote. "However, unlike Adobe, we think people's shift from packaged software to subscription services will take time."

That timeline, said Patterson, runs to "within a decade." And during that span, Microsoft will keep selling perpetual licenses for Office.

"Within a decade, we think everyone will choose to subscribe because the benefits are undeniable," Patterson argued. "In the meantime, we are committed to offering choice -- premier software sold as a package and powerful services sold as a subscription."

Not quite a promise -- the phrase "within a decade" doesn't guarantee a 10-year stretch -- and Patterson did not set criteria Microsoft will use to determine when to ditch perpetual licenses.

In fact, when contacted today for confirmation, Microsoft denied Patterson's comments were a decade-long guarantee. "We have not set a timeline for moving to subscription only," a spokeswoman said in an email reply to questions. "We will continue to listen to customer feedback on how they want to get Office."

If the company does stick with traditional licenses for 10 years, it would run counter to analysts' expectations. In February, Paul DeGroot, principal at Pica Communications, a consulting firm that specializes in deciphering Microsoft's licensing practices, predicted that within five years Microsoft will have dumped Software Assurance (SA), its annuity- and subscription-like add-on for enterprise licensing programs that guarantees customers rights to free future Office upgrades.

The death of SA would mean Microsoft had essentially shifted its focus to subscriptions. "I can see a time when Microsoft says, 'The next edition of Office will be available only by subscription,'" DeGroot said at the time.

A five-year lifespan for perpetual licensing would mean, going by Microsoft's usual three-year major release cycle, that it would offer traditional licenses for only the next upgrade, perhaps called Office 2016, but not the follow-up Office 2019.

Microsoft has thought about going subscription-only. In a February interview at a Morgan Stanley-hosted technology conference, Kurt DelBene, president of the Office division, was asked whether Office would move to the model. "I think it's the one thing that we talk about a bunch and try to figure out exactly where it's going," DelBene said then. "I think we have aspirations that ultimately it might get there."

Adobe's shift to software-by-subscription was announced Tuesday, when it said that upgrades to the Create Suite bundle -- PhotoShop is the best known of the CS applications -- would only be offered to subscribers of what it's called Creative Cloud. The current CS6 will continue to be sold and supported with bug fixes, but it will be the end of the line for those applications' perpetual licensing model.

Patterson also claimed that a quarter of consumers buying the newest version of Office did so by subscribing to Office 365 Home Premium. He did not divulge the source of his data, but it may have been media reports of U.S. retail sales.

A month ago, Stephen Baker of the NPD Group said that Office 365 accounted for 25% of all Office retail unit sales in the U.S. since its introduction in late January.

"So, perhaps the shift is happening faster than we originally thought, and Adobe is helping blaze the trail," Patterson said.

 

This article, Microsoft won't guarantee buy-not-rent Office for next decade, was originally published at Computerworld.com.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at  @gkeizer, on Google+ or subscribe to Gregg's RSS feed . His email address is gkeizer@computerworld.com.

See more by Gregg Keizer on Computerworld.com.

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