Microsoft to slash cloud-connection rights for stand-alone Office

Microsoft office online
Mark Hachman

Microsoft last week announced sweeping changes to Office's support rules, which will push more corporate customers to the Office 365 subscription model.

The support policies introduced Thursday will cut in half the time that non-subscription versions of Office -- usually labeled "perpetual" as a nod to the licenses which, once purchased, let customers run the software as long as they want -- can connect to Microsoft cloud-based services. These include Microsoft-hosted Exchange email, the OneDrive for Business storage service and Skype for Business, the corporate edition of Microsoft's video-calling service.

Under the new rules, owners of perpetual-license versions of Office will be able to use those services only during the first half of their 10-year support lifecycle, the portion Microsoft dubs "mainstream." Currently, those customers may connect to cloud services such as Exchange mailboxes for the full decade of Microsoft's combined mainstream and "extended" support.

For example, Office 2007 will exit its 10 years of support in October; as of October 31, "Outlook 2007 will be unable to connect to Office 365 mailboxes, which means Outlook 2007 clients using Office 365 will not be able to receive and send mail."

Microsoft will enforce the changed requirements starting Oct. 13, 2020, said Ron Markezich, the executive who heads Office marketing, in a post to a company blog. As of that date, "Office 365 ProPlus or Office perpetual in mainstream support will be required to connect to Office 365 services," said Markezich.

Office 365 ProPlus is the standard suite provided to enterprise customers who subscribe to Office 365 plans that include rights to the locally installed applications, including the $20-per-user-per-month Office 365 Enterprise E3 and the $35-per-user-per-month Enterprise E5.

By the time the Oct. 13, 2020, date comes up on the calendar, all currently supported editions of perpetual Office -- Office 2010, Office 2013 and the newest, Office 2016 -- will have dropped out of mainstream support. (Office 2016's mainstream support will expire on that date.)

The bottom line: If enterprises want to access Office 365's cloud-based services, they must 1) subscribe to a plan that includes ProPlus and, more importantly, install and use that constantly upgraded suite; or 2) pay for and install a perpetual-licensed version of Office every five or fewer years.

Microsoft justified the change with much the same kind of explanations it's used for other big shifts in support, notably the mandate that older editions of Windows, including Windows 7, will not be supported on devices powered by the latest Intel and AMD processors.

"When customers connect to Office 365 with a legacy version of Office, they're not enjoying all that the service has to offer," argued Alistair Speirs, a senior operations program manager, on another blog. "The IT security and reliability benefits and end-user experiences in the apps is limited to the features shipped at a point in time."

Markezich went even further. After using the same explanation -- word for word -- as Speirs, he added to the bash-perpetual-Office campaign by trumpeting its rival, ProPlus. "When a modern app is connected to a modern service, magic happens," Markezich asserted.

"What Microsoft's saying is that the Office 365 services won't work forever with [a perpetual-licensed Office], that eventually things will break," translated Wes Miller, an analyst with Directions on Microsoft.

By changing the connect-to-services rules, Microsoft has taken aim at customers who have mixed cloud services with traditional perpetual -- or "stand-alone" -- software. Most enterprises, in fact, continue to use perpetual-licensed versions of Office, even as some have outsourced email to Microsoft by subscribing to lower-priced plans like the $5 per-user-per-month Office 365 Business Essentials or the $8 per-user-per-month Office 365 Enterprise E1.

According to Michael Silver, an analyst at Gartner, many businesses have dipped into Office 365 sans ProPlus to cap costs. Some of those Microsoft customers "have saved some money for a while," Silver said, by sticking with an Office edition for six, seven, eight years -- or even longer -- rather than upgrade every three, the usual interval between perpetual-licensed versions. "Organizations have tried to moderate their costs for a while," Silver added of such firms.

Under the new rules, that won't be possible, as companies will be able to run any given perpetual-licensed Office for no more than five years if they want to access cloud-based email hosted by Microsoft, or use the 1TB of OneDrive for Business storage space that comes with a Business Essential or E1 plan.

Silver noted that while Microsoft's decision could be viewed as just one more shove to subscriptions, that wasn't surprising. "The writing has been on the wall," he said of the decline in emphasis of perpetual-licensed Office. As Silver implied, Microsoft has made no secret that it prefers subscriptions -- and not just for Office -- for the recurring revenue they generate.

Companies will still be able to connect Office to on-premises services, such as an Exchange server, as long as they like under the new rules, Miller and Silver both pointed out. And enterprises that prefer to acquire Office as perpetual-licensed software won't be barred from that either: Microsoft has already pledged to produce a successor to Office 2016 that would connect to cloud services after October 2020.

But the policy revisions will affect Office users. "This is going to be an issue" for some corporate customers, Silver said, as they transition from the essentially-static, perpetual-licensed Office to the upgraded-twice-a-year ProPlus. "It can be a difficult transition to manage."

Copyright © 2017 IDG Communications, Inc.

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