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FAQ: Microsoft rents out Office 365

Pay once for Office, or pay-as-you-go with a subscription to the suite?

February 2, 2013 06:12 AM ET

Computerworld - Microsoft this week launched the first two of its new pay-as-you-go subscription plans for Office.

The company's rarely-shy CEO Steve Ballmer called the sales approach "an entirely new way to think about the productivity experience," and predicted that the majority of the world's billion-and-counting Office users will eventually adopt software rental.

"People will love instant access to all their documents and settings across their devices," said Ballmer in a Tuesday blog. "They'll love staying connected to the people and information they care about. And they'll love having the latest version of Office at all times, because it simply updates without the hassle of purchasing and upgrading to a new version."

That's a whole lotta love.

Or is it? Is Ballmer right? Is this the way we'll get software from now on? Or is it an experiment -- a gamble -- that could easily go awry?

That's for customers like you to decide. So what's in it for you, this Forever (Paying for) Office?

We have answers to that question, and a bunch more. Gotta love it.

What's Office 365? It's a new way for Microsoft to sell Office, the money-making and market-leading productivity suite best known for its Excel spreadsheet, PowerPoint presentation maker and Word word processor.

Rather than sell what's called a "perpetual license" to the suite -- a fancy way to describe a copy you pay for once, then use as long as you'd like -- Microsoft wants you to subscribe to Office, paying an annual fee for the right to run the software.

It's like the difference between buying and leasing an automobile, or buying and renting a house. Pay a lot now, and own it; or pay a lot less to just borrow it.

Subscribe to software? Why would I do that? Microsoft's sweetened the deal with more rights -- you can install Office on up to five Windows PCs or Macs in the household -- and some extra benefits, including additional online storage and free international calling minutes on its Skype Internet phone service.

Because all of Microsoft's retail perpetual licenses allow you to install the suite on just one machine, the one-versus-five difference is the most important.

What can I buy today? Either of two pay-as-you-go software subscription plans, Office 365 Home Premium and Office 365 University.

Subscription plans for businesses, including a $150-per-year Office 365 Small Business Premium, which Microsoft has already announced and discussed in detail, won't be available until Feb. 27.

Is this the first time Microsoft's tried to talk consumers into software-by-subscription? No. In 2008 it trotted out Equipt, a $70-per-year deal that included Office 2007 and some other software. The experiment failed, and Microsoft pulled the offer after just nine months. Not exactly an auspicious omen, but then, the world's different today than five years ago.



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