The Latest Microsoft Office – Rent or Buy?

Okay, so it’s not exactly a rental system, but Microsoft’s new pay-as-you-go subscription plans for its latest Office iteration are certainly close. Microsoft CEO Steve Ballmer has labeled the sales approach “an entirely new way to think about the productivity experience“, and predicted that the majority of the world’s billion or so Office users will eventually opt for the pay-as-you-go service.

Office 365 Home Premium subscribers receive all the full-featured Office applications they know and love, together with impressive new cloud and social benefits built in. One subscription can run the service on up to five devices, all for just $99.99 a year. People will love instant access to all their documents and settings across their devices and how Office takes full advantage of the new Windows 8 touch interface. 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.

Now that’s a whole lot of love!!

But is Mr. Ballmer perhaps barking up the wrong tree? Is this really the way software is destined to be delivered to us in future? Or is it just Microsoft playing a huge gamble – one which could easily backfire?

I guess that is, to a large extent, in the lap of the Gods, and very much down to how consumers perceive this new [and you have to admit] innovative subscription model.

Users can still purchase Office outright of course, but it’s clear that Microsoft and Mr. Ballmer would much prefer to see us paying an annual fee for the right to continue running the software, rather than paying one-off fees for perpetual licenses.

So, let’s take a look at pricing structures and see how they compare for value:

Pay-as-you-go

There are currently two pay-as-you go packages in place; 1) Office 365 Home Premium for home users… and 2) Office 365 University, which is a heck of a lot cheaper but you must be a full or part-time student, or a faculty/staff member at an accredited college or university in order to qualify. (businesses plans are scheduled for release toward the end of February).

• The Office 365 Home Premium package costs $99.99us per annum, or $9.99us per month. This includes the latest versions of Word, Excel, PowerPoint, OneNote, Publisher, and Access for Windows. The Mac version is a little more limited, including Excel, Outlook, PowerPoint and Word. As a sweetener, the package also includes 20GB free SkyDrive storage, plus 60 minutes of free international calls on Skype. Plus, the package can be installed on up to five (5) PCs or Macs. And, of course, just so long as you keep paying the subscriptions, the very latest versions will be available to download free of any additional charges.
• Office 365 University offers the exact same software and free extras at $79.99us for a 4 year subscription. However, consumers can only install  this suite on a maximum two Windows PCs or Macs.

*System requirements: PC users must be running Windows 7 or Windows 8 (XP and Vista users are excluded). Macs must be powered by OS X Snow Leopard, Lion or Mountain Lion.

Purchase outright (perpetual licenses)

• Office Home and Student 2013 costs $139.99 and includes Word, Excel, PowerPoint and OneNote.
• Office Home and Business 2013 costs $219.99 and includes the above applications, plus Outlook.
• Office Professional 2013 costs $399.99 and  includes the applications in Home & Student, as well as Access, Outlook and Publisher (Office Professional is the same suite as the one installed via Office 365 Home Premium or Office 365 University subscriptions).

Now here’s the biggest difference between the two methods; all the above perpetual licenses can only be installed on just one machine. Whereas the pay-as-you-go system allows for up to five installations. Plus, of course, the version associated with a perpetual license is, at some stage, going to be superseded, requiring a further hefty payment if one wishes to upgrade.

Have you done the math? Seems to me that the pay-as-you-go model will be far more economical where multiple machines are involved. Installation on five machines, for example, would cost just $20.00 per year, per machine. And with 5 free upgrades each time a new version is released… which equates to every 2 years (average) since the arrival of Office 98.

Let’s take a middle of the road example, say two machines involved: One pay-as-you-go subscription covers both machines at $100.00 total per year. Two years on and a new version is released; upgrade costs nil. Total expenditure over 2 years = $300.00 (paying in advance).

Same scenario using perpetual licenses for the same Pro suite: One license required for each machine at $400.00 per license = $800.00. Upgrade after two years requires a further $800.00. Total expenditure over 2 years = $1600.00.

Of course, that is a massive oversimplification. Many users would be running just one machine, and many would not bother upgrading through two and three new versions, effectively spreading their payment over 6 – 10 years. And many would be more than satisfied with Home and Student, or Home and Business. There are a host of variables.

Given the right circumstances though, I can see where utilizing the Office 365 pay-as-you-go system could be very beneficial.

Finally, a word on what happens if you cancel your annual subscription or allow it to expire: Office will then be downgraded to what Microsoft refers to as “read-only mode”, which means that although the applications still run, you will only be allowed to read and print documents. The software cannot be used to create new documents, or make any changes/edits to existing ones. In other words, for all intents and purposes, the software is rendered practically useless.

So, what do you say… rent or buy?

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