Microsoft's one-PC limit isn't new in Office 2013

Microsoft is busy changing to a devices and services company. One of those changes is making the Office 365 subscriptions to the desktop Office 2013 software a better deal than buying a perpetual licence in a cardboard box (which, unless you're in a developing country with notoriously poor connectivity, contains only a product key card with a code on).

There's been a lot of discussion of the limitation that the retail (consumer rather than business) versions of Office 2013 can only be installed on one PC — not one at a time, but only one PC. If it crashes, you can reinstall Office — on that same computer. If the PC fails, you can't transfer the licence. A stringent new restriction pushing users to the Office 365 service, most commentators have suggested. ZDNet colleague Ed Bott takes a more thoughtful look at Microsoft's changing business model.

But as it happens, this limitation isn't new. "The Office 2013 software is licensed to one computer for the life of that computer and is non-transferable," a Microsoft spokesperson confirmed. But they also pointed out that "Office 2013 has the same licensing provisions around transferability as the equivalent Office 2010 package, which was the package purchased by most Office 2010 customers."

That was the key card version of Office 2010 Home and Student, and it could only be installed on one computer. The Software Licence Terms make this quite clear:

2. INSTALLATION AND USE RIGHTS.

a. One Copy per Device. The software license is permanently assigned to the device on which the software is initially activated. That device is the "licensed device."

The question came up on Microsoft's community support site back in 2010 and the answer was clear; the key card version of Office 2010 Home and Student can only be used on the first PC you install it on.

Why the fuss now and not then? Probably because not many people noticed the restriction; who actually reads the licence? Plus, this time, there's the suspicion that Microsoft is pushing people to a more expensive way of buying Office. Certainly getting Office users to pay for the software every year would bring in plenty of money. If all billion Office users took the $99 annual Office 365 Home and Premium subscription, that would bring in almost $25 billion a quarter; putting them all on a $20 a month E3 plan would bring in twice as much revenue as Apple from the Office division alone.

The thing is, there have always been more expensive ways of buying Office that give you more rights, as well as more features than the cheapest option. With Office 2010, you could buy a retail version with the software on DVD and run it on a desktop and notebook at the same time, as well as transferring it to a new PC every 90 days. More people bought the key card version — not because they didn't care about moving it to a new PC, but because it was cheaper.

With Office 2013, you can buy the Office 365 Home Premium subscription and share Office with four other members of your family (or use it on four other PCs). In fact, you can stream Office onto a PC in a matter of minutes (even on a slow internet connection) and remotely deactivate it without going back to that PC, and do the same on the next PC you need to use. This means you can effectively use it on an unlimited numbers of PCs. You also get Skype minutes and extra SkyDrive storage, and a new version of Office whenever it comes out to sweeten the deal.

But, as has been the case for the last three years, if you want the very cheapest version of Office, you can't keep using it for year after year — unless you have an unusually long-lived PC.

It's a trade-off you have to make, and it may well cost Microsoft some sales from users refusing to upgrade from Office 2007 or earlier because of the limitation. It's just not actually a new trade-off.

Update:

I had several questions about running Office in a VM to avoid the transferability limitation. This would certainly break the spirit of the licence and the information about activation in the SLT for the keycard version of Office 2010 suggests it may not work any way.

4. MANDATORY ACTIVATION. Activation associates the use of the software with a specific device. During activation, the software will send information about the software and the device to Microsoft. This information includes the version, the license version, language and product key of the software, the Internet protocol address of the device, and information derived from the hardware configuration of the device.

(If you're looking at the SLT, make sure to read section 3, the key card licence, rather than section 1, which is the full retail product licence, or section 2 for OEM versions of Office 2010.)