Office for Windows 10 is not free for everyone

Business use will require 'commercial license,' but Microsoft leaves customers in the dark about licensing details for larger tablets, notebooks and 2-in-1s

The touch-centric Excel for Windows 10.

Microsoft will license some of the touch-based Office for Windows 10 apps in the same way it now handles those for iOS and Android, the company said today.

That means the same policy holds for business as before: Office still costs money.

But Microsoft's licensing plans for the apps -- the core trio of Excel, PowerPoint and Word, as well as OneNote and Outlook, the firm's note taking and email clients, respectively -- are still unclear, both because Microsoft won't discuss every element and, at least in part, because of the company's Byzantine licensing practices.

Adding to the potential for confusion is that Microsoft will actually be releasing two sets of Office for Windows 10 apps: One for smartphones and tablets with screens smaller than 8-in., another for all other touch-enabled devices, including larger tablets, notebooks and desktops, and 2-in-1 hybrids.

And the two sets may be licensed differently.

While the apps will be free to use during the preview period -- which kicked off Wednesday with the launch of Excel, PowerPoint and Word for larger tablets and touch-ready PCs -- that will change when the software officially launches later this year.

At that time, consumers with the pre-installed apps on a smartphone or tablet smaller than 8-in. -- call that Office Small -- will be able to conduct "core editing, viewing and printing" tasks without having to pay. But some advanced features will be blocked, and unlocked only if the user has a consumer-grade subscription to Office 365.

Business customers must have what Microsoft said is a "commercial license" to use the Office for Windows 10 apps for work-related purposes. It's unclear what constitutes a "commercial license," but one would almost certainly be a subscription to a business-level Office 365 subscription.

Microsoft confirmed that in a follow-up answer, saying that Office Small's licensing would be "consistent with those required for Office apps on iPad and Android tablets."

Office for iPad, and the newer Office apps for Android tablets -- both released in 2014 -- require an Office 365 subscription for advanced editing and for commercial purposes. Consumers can unlock the advanced editing tools with an Office 365 Personal or Home subscription, which list for $70 or $100 annually; commercial use demands a business-grade Office 365 subscription, such as Office 365 Business ($8.25 per user per month), Business Premium ($12.50), ProPlus ($12) and Enterprise E3 ($20).

"This seems in line with what they've done otherwise," said Rob Helm, an analyst with Directions on Microsoft, in an interview. "But it is something of a turnaround for Microsoft not to favor Windows."

Helm was referring to how Microsoft includes Office Mobile -- the predecessor to Office for Windows 10 -- with Windows Phone and gives rights to everyone, including for commercial purposes. If Microsoft follows through with its Office Small licensing plans, Windows smartphones and small tablets won't have any advantage over those from rivals, a solid sign that the company is serious about its cross-platform strategy.

But while Office Small will be treated identically to Office on other tablets, Office for Windows 10 on tablets with screens 8-in. or larger, on touch-enabled notebooks and desktops, and on 2-in-1s like Microsoft's own Surface Pro 3 -- call that version Office Large -- may not be.

Microsoft wasn't willing to share licensing details of Office Large.

"During the Preview, we are trying out a few different scenarios and will share more licensing and pricing details at general availability," a company spokeswoman said.

With this split of Office for Windows 10, Microsoft sees Office Small as analogous to Office for iPad -- one for tablets -- but may lean toward Office Large as less a companion to the traditional desktop suite than a substitute for it, especially on 2-in-1s, which the company considers PCs, not tablets.

When asked whether consumers would be able to download Office Large from the Windows Store free of charge, and use their "core editing, viewing and printing" features, also free of charge -- as with Office Small -- Microsoft gave its "we are trying out a few different scenarios" answer.

For commercial purposes, Microsoft said that Office Large, like Office Small, would require "a qualifying commercial license to use these apps."

It defined "commercial license" as "consistent with those required for Office apps on iPad and Android tablets" -- in other words, an associated Office 365 business subscription. But the spokeswoman also said, "We will have more to share at general availability," hinting that there may be other ways for businesses to license Office Large.

The repeated assertion that it would not reveal all aspects of Office for Windows 10 licensing until closer to the ship date -- likely this fall when Windows 10 launches -- and the talk of trying out different approaches opens the door to speculation that Office Large will be treated substantially differently than Office Small.

Microsoft has at least three options: 1) Give away Office Large to consumers, as it will Office Small, 2) charge a separate fee for Office Large, both for consumers and businesses, the latter with an additional licensing fee, or 3) allow its use by subscribers of Office 365, owners of the upcoming Office 2016 desktop suite, or both.

Office 2016, the name of the impending upgrade to Office 2013 on Windows, perhaps also the name of the successor to Office 2011 for the Mac, will ship in the second half of the year, probably simultaneously with Windows 10.

Microsoft's hesitancy to define plans for Office Large wasn't surprising to Helm. "They may not know themselves yet what they'll do," Helm said.

Thus far, Microsoft has treated Office on mobile platforms like the iPad, iPhone and Android as an adjunct to the desktop suite, and so has been freeing some functionality. But it may not want to position Office Large in the same way, suspecting that it might replace Office 2016 on some devices, reducing revenue.

The most expedient solution would be to tie Office Large to Office 365, the rent-not-buy subscription program that the company continues to pitch both consumers and corporations. In that case, it would probably count Office Large as one of the five allowed PC or Mac installs for each user, not as one of the five smartphone or five tablet installs.

But if Microsoft sees Office Large as a replacement for Office 2016 (or its predecessor Office 2013), it may want to accommodate customers, especially enterprises that have no interest in adopting Office 365, with a way to obtain the apps, perhaps with additional licensing or fees, or as a part of the license of Office 2016.

Jan Dawson, chief analyst at Jackdaw Research, was skeptical that Office for Windows 10's apps are a credible replacement for Office on the desktop. He noted that for all the hullabaloo over a touch-enabled Office in the past year, the mouse-and-keyboard-controlled desktop suite remains a much better choice for business tasks.

Directions' Helm agreed. "Office for Windows 10 has the basic features, and so is like Office Web Apps in that respect," said Helm. "But for more specialized tasks -- we rely on Outline mode in long documents -- Office for Windows 10 is just not there."

Microsoft also confirmed that, as the product name implied, the touch-first apps will run only on Windows 10, even though the Windows Store beta pages for the previews currently say "You need Windows 8.1 or higher to purchase and install this app."

That won't be much of a barrier for consumers, who thanks to Microsoft's one-year free upgrade offer from Windows 8.1 Update and Windows 7 SP1, will quickly adopt Windows 10.

Copyright © 2015 IDG Communications, Inc.

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