Microsoft to cut perpetual Office support by 50%, raise price by 10%

The move is more evidence, as if it's needed, that Microsoft remains eager to push, pull, and prod commercial customers into service-like subscriptions.

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Microsoft plans to upgrade the "perpetual" Office for enterprises in the second half of the year, when it will also slash support to five years and raise prices by 10%.

The company's multiple shots at the traditional form of licensing — dubbed "perpetual" because the license provides rights to run the software as long as one wants — are more evidence, if it's needed, that Microsoft is eager to push, pull, and prod commercial customers into service-esque subscriptions.

Microsoft reiterated, seemingly for the nth time, that it is expending virtually all of its Office-related resources on the subscription-based Office 365 and Microsoft 365, and implied that anything but a subscription would be second rate and substandard.

What's changing?

The upcoming changes to Office are among the most sweeping since Microsoft overhauled the suite's development and release calendar with Windows 10's launch.

Two versions: Rather than a single nameplate for all perpetual editions of Office, as in the past, there will henceforth be two. The next Office for consumers and small businesses will be labeled Office 2021, according to Jared Spataro, the executive who leads the Microsoft 365 group. But the SKU (stock-keeping unit) designed for enterprises and other large organizations will be pegged Office LTSC, the four-letter suffix referring to Long-term Support Channel, a term borrowed from Windows.

Support: The new standard support span for Office — both 2021 and LTSC — will be five years, not the 10 the suite once received. (The most recent version with a decade of support? Office 2016.) That doesn't  even match the seven years given to Office 2019 (which leaves support in October 2025). The only SKUs previously provided with five years of support were those for the Mac (which always got less than the Windows versions).

Although Spataro did not disclose a release date for either Office LTSC or Office 2021 — the former will launch in "the second half of the year," he said, while the latter will debut "later this year" — the 2021 label hints that at least the consumer/SMB edition will appear no later than summer. (Microsoft's Office numeric naming has used the current year up until a July release date; release dates later than that carried the next year's designation.)

While the split naming offers interesting clues about Office's future, the real difference maker is the cutback to support.

The spear of support

Microsoft wields its support policy like a weapon — a Greek hoplite's spear, say — to poke and prod customers towards ends the company desires (which customers may, or may not, also desire). In fact, support is one of Microsoft's most powerful weapons for directing customer behavior, second only to price.

Examples of Microsoft's spear of support are legion. For example, it steers corporate customers to the Enterprise and Education SKUs of Windows 10 by giving those versions, and only them, 30 months of support — a year's more than the 18 months others, such as consumers and small businesses, get.

Reducing support for Office LTSC and 2021 to five years makes the software less attractive in any comparison with Office 365/Microsoft 365. Perpetual licensing's biggest advantage over subscriptions is cost, but that advantage relies on the customer upgrading relatively infrequently. By offering an upgrade every three years and limiting support to five years, Microsoft has forced customers who want or need perpetual licensing to deploy every version. There's no way to skip an upgrade because there's no overlap in support for versions n and n+2.

Microsoft Office LTSC's release and support calendar IDG/Gregg Keizer

The way Microsoft's laid out Office LTSC's release and support calendar, customers will have to upgrade at the launch of each new refresh. The reason: There's no overlap between the current version and the one after the next.

Having to upgrade every three to four years, without the option of extending that to better amortize the perpetual license purchase, puts pricing pressure on the on-premises option.

Office Professional 2019, for instance, runs $440 at retail. During a 36-month stretch, that pencils out to $12.22 per month; over 48 months, it's $9.17 a month.

Both numbers are higher than the $8.25 per month price of the Microsoft 365 Apps subscription, the Microsoft 365 (formerly, Office 365) plan that provides only the suite's applications of Outlook, Word, Excel, PowerPoint and OneNote.

Put plainly: By forcing upgrades on a three- or even four-year cadence (and a four-year tempo would be almost impossible because it would demand an immediate deployment upon release, with only a 12-month upgrade window at the end), Microsoft's priced the perpetual license out of the market.

And it certainly won't help when Microsoft raises prices for Office LTSC, which it's promised it will do. "We ... will increase the price of Office Professional Plus, Office Standard, and the individual apps by up to 10% at the time of general availability," Spataro said. The reason for the increase? Unclear, although Spataro seemed to link the price boost to the fact that Microsoft sees LTSC as "a specialty product intended for specific scenarios." (Think about when companies make limited editions and charge higher prices because of the bother they went to, or firms that charge higher prices when the market for that product is relatively small.)

The prices for Office 2021, meanwhile, will not change, Spataro asserted. From the target audience described — consumers and small businesses — it's likely Microsoft will stick to the two editions of the past. For Office 2019, they were tagged "Office Home & Student" (consumers) and "Office Home & Business" (SMBs).

What does LTSC mean?

It's hard to know what to make of the naming of the enterprise SKU as Office LTSC. Clearly, Microsoft wants to link the one-time-payment version of Office with the long-term release option of Windows. According to the company, it was for consistency's sake. "With this release, we will bring Office and Windows into alignment in support of the same limited scenarios," wrote Spataro.

While Microsoft has long disparaged Windows 10 Enterprise LTSC — again, that stands for "Long-term Support Channel," which formerly went by "Long-term Support Branch," or LTSB — as an illegitimate pick for general deployment, it has rarely treated perpetual Office the same way. There have been exceptions: Two years ago, Microsoft launched a misguided public relations campaign that portrayed Office 2019 as second-class when pitted against Office 365.

By choosing the negative label LTSC, Microsoft has implied, and none too subtly, that it will badmouth Office's one-time-payment option as it has the same-named Windows build. And with both now sporting reduced support, customers would be smart to assume each option is — or soon will be — on a deathwatch, with that step followed in the near-to-mid-term by a declaration of obsolescence, then abandoned.

(Computerworld posits that there is no better indication of a company's desire to do away with a product than its slashing of support. It's the clearest message of end times, short of actually pulling the plug.)

Whether Microsoft's new name means it will build the perpetual version of Office differently than in the past is unknown. When the company composed Office 2019, for example, it took code from Office 365, though not current code, inserted some of the features and functionality that had debuted in Office 365 ProPlus (the name for the actual Office applications bundled with the various services of 365) since the launch of Office 2016, then rolled out the build. As Microsoft has explained the process — such as it has — it's a subjective selection of what to include in the perpetual version.

That, of course, allows Microsoft to put its thumb on the scale for Office 365/Microsoft 365.

(It also ensures that Office 2021, like 2019 before it, sports applications that, in Spataro's words of two years ago, are "frozen in time" because "they don't ever get updated with new features." That's yet another huge edge to Office 365/Microsoft 365.) The use of LTSC with Office for the enterprise-grade perpetual license suggests that it will be built much the same way that Windows 10 Enterprise LTSC has been.

LTSC is just another build of Windows, another channel in Redmond's parlance, like Semi-annual and Insider. But Windows 10 LTSC is crafted differently, at least according to Microsoft. "...Each release contains all the new capabilities and support included in the Windows 10 features updates that have been released since the previous LTSC release," Microsoft said in 2018.

Because Spataro provided few details about the content of Office LTSC, it's impossible to know whether the above is how Microsoft will construct the version. If Office LTSC does include everything that has been updated in or added to Office 365/Microsoft 365 since the fall of 2018 (when Office 2019 launched), all the better for customers. It would mean Microsoft is not penalizing the perpetual edition, which seems unlikely.

But that process would seem much simpler to execute, saving Microsoft development resources for work on what it considers important: the advancement of Office 365/Microsoft 365.

Copyright © 2021 IDG Communications, Inc.

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