What you gain and lose with Office 2013 subscriptions

What you gain and lose with Office 2013 subscriptions

Summary: Can Microsoft convince you that renting Office is better than buying? They're using a classic carrot-and-stick approach to get you to switch. Sticking with "traditional" software will cost you dearly.

TOPICS: Software, Microsoft

Microsoft wants you to stop thinking of software as something that comes in a box.

Earlier this year I wrote about Microsoft’s radical new business plan, in which services are a cornerstone. Microsoft CEO Steve Ballmer confirmed that observation last week in an interview with the Seattle Times:

I think when you look forward, our core capability will be software, (but) you'll probably think of us more as a devices-and-services company. Which is a little different. Software powers devices and software powers these cloud services, but it's a different form of delivery....

That plan is abundantly clear in Microsoft’s announcement today of the final pricing and packaging for Office 2013. Windows 8 might be getting all the recent headlines, but it’s worth noting that the Microsoft Business Division, of which Office is the biggest part, brings in more revenue for Microsoft than any other division. In the just-concluded fiscal year, Office and friends brought in $24 billion, versus $18.7 billion for Server and Tools and $18.3 billion for Windows and Windows Live.

For more details see: Microsoft announces Office 2013 prices and packaging

With the addition of subscription-based pricing for Office 2013, Microsoft is aggressively pushing its Office customers to get out of the traditional software business and begin paying subscription fees.

To do that, it’s using a classic “carrot and stick” approach.

The first stick is the sticker shock you’ll get if you price out the “traditional” boxed versions of Microsoft Office. For Office 2013, those prices are up a minimum of 10% and as much as 17% per copy.

But the hurt is magnified if you want to install Office on multiple PCs. Office 2013 will offer no multi-copy discounts for traditional packaged software as Office 2010 does. If you want to run Office 2010 Home & Business on a desktop and a notebook, you can buy a discounted two-pack license for $280. A similar two-PC deal is available for Office 2010 Professional at $500.

For Office 2013, you have to buy two separate licenses, at a total cost of $440 and $800, or an increase of 57% and 60%, respectively.

And the $150 Office Home & Student three-pack is gone as well. If you and your spouse and your teenager want separate copies of the boxed Office 2013 Home & Student, you’ll pay $420.

Ouch. Those are very hefty price tags, which is why maybe you want to take a closer look at those carrots.

The $100-per-year household license is not a bad deal if you imagine a future a year or two from now when you and your family have an assortment of desktop PCs, Macs, tablets, and notebooks, with files and Office apps roaming freely between them. The per-device licensing model makes no sense in that world; the activation hassles alone would be a killer.

Properly licensing those five devices using traditional boxed copies of Office 2010 would cost a minimum of $300. That’s the same price you’d pay in subscription costs over three years, except you’d get the right to reassign licenses, automatic updates and even whole version upgrades, and extras like additional online storage and Skype calling minutes. And in the Office 2013 world, with no multi-PC discounts, the price tag for five devices is unacceptably high at $700.

In addition, the new Office 2013 Home Premium subscription includes desktop apps you won’t get at all with the Home & Student package, including Outlook, Publisher, and Access. Those are some tasty carrots if you’re a confirmed Outlook user.

For business customers, the subscription cost is considerably higher. At $150 per user per year, you’ll spend $450 over a three-year period. That’s not chump change, but it is a better deal than the boxed copies if you have two or more devices. You’ll pay $440 for two Office Professional 2013 licenses. That’s the same amount as  a Small Business Premium subscription, which includes Access and Publisher as well as Exchange Online, SharePoint Online, and the surprisingly useful Lync conferencing software.

For some people, the very concept of renting software is a non-starter. But the software landscape has changed dramatically in the past few years, and maybe the time is right for a subscription model.

Is the price right for you? Let me know in the Talkback section.

Topics: Software, Microsoft

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  • Are they nuts?

    It seems that instead of pushing people to Office, they're going to be pushing them away from it. I'm a student. I have little money to throw around. Renting is absurd, and I'm certainly not paying hundreds of dollars for what I need Office for.

    Maybe it's time to ditch?
    The one and only, Cylon Centurion
    • Cheap Copies of Office

      If you are truly a student you should purchase Office through your IT department. Most schools have cheap software available for their students. Northwestern in Chicago offers Office 2010 for $10 or so.

      You would do well to check with your school to save some money.
      • I'm hoping.

        They had some good deals with Office 2010 for students (I forget what it was called - Ultimate Steal?). I hope that comes back.
        The one and only, Cylon Centurion
        • Yes, it was Ultimate Steal

          There were two such deals in the past. The Office 2007 Ultimate Steal was Office Ultimate with every app except Visio, which had unlimited Visio downloads. Then the next one was Office 2010, but it was Office 2010 Professional, which did not include every single app. Again Visio 2010 was available at unlimited downloads. The Office 2007 and Office 2010 were a once per year (calendar, not academic). But at our university, it was $59, not $10. Also, Windows 7 was free. First year it was unlimited downloads then switched to 1 time per calendar year, but still free. It was interesting that Windows 7 counted 32 bit and 64 bit as separate downloads so you could get one 32 bit and one 64 bit. If your school has MSDNAA, you can also get Visual Studio with various languages for free and that too is unlimited.

          As for Windows 8 and Office 2013, I don't have any information. I could be removed. I still see Windows 7 Pro and Office 2010 Pro. Visio is still there. It probably depends upon MSDAA and your school's agreement. Also, it starts off with requiring an .edu domain for your e-mail address. I haven't tried with a school email that doesn't have .edu. My daughter's school email ends in .org.

          But then again $100 isn't that bad for a subscription based Home and Student. I think this one would be better than the current education discount, since it is just once. We have 6 computers for 5 people in our household, and everyone except me, uses Outlook. So, in the past this got very expensive. For $100 ($20 per person) it comes out cheap for the rest of the family and I can use the MSDNAA for myself.

          Hope this helps.
      • You're missing the point...

        The artivel refers Office 2013. Any deals on Office 2012 is irrelevant.
        • You're missing the point...

          Sorry for the spelling mistakes :-(

          It should have read:
          The article refers to Office 2013. Any deals on Office 2010 is irrelevant
          • Nazi ahoy.

            Are irrelevant.
            Benjamin NElson
          • Who's really missing the point here?

            You don't need to buy the newest Office program to get the job done properly. Open Office does it's job just as well as Microsoft Office and it's free. Plus there is no reason to buy new software just because it's "new". Over half of Microsoft's "new" ideas are just updated versions of old ideas they've already used or heard about.
          • Precisely!

            Ed says: "Sticking with "traditional" software will cost you dearly."

            No it won't. I'm sticking with Office 2007, and it won't cost me a penny!
          • Open Office would be tempting

            But it requires Java so that is a non-starter.
      • But what if Microsoft changes the terms for those Campus Agreements?

        In any practical sense, a computer is like a car. You own it for a few years and then you replace it. Leasing a car used to be an economical option because everybody traded every 3 to 5 years. Well, no more. Today, cars are so expensive - and so reliable - that owning a car for ten years (five years beyond your last payment) makes owning it far less expensive than leasing it. If leasing software is more expensive - over the life of the product - than owning it, the subscription model will never work.
        M Wagner
        • Not so sure about that

          If the initial outlay of cash is significantly less than purchasing outright, the subscription model is likely to be much more successful. I would be surprised to find anyone that buys a tablet purchasing Office 2013 instead of using the subscription model... even if they still had a discount for multiple licenses the subscription model would have been more attractive to me. The ONLY thing that would have made purchasing it a better solution is one license for 2-3 machines... that would accommodate most families.
          • Don't Agree

            In the past, you could usually find an Office upgrade for $150 $175. So $100 per year seems excessive for something you don't own. This idea of a subscription model just seems like gouging.
      • cheap alternatives to office

        If you are truly a student you should consider free alternatives like Open Office. While Microsoft does offer very cheap software to students and it is a real option, you need to check if, given the new office pricing model, students end up getting actual software instead of just a cheaper subscription.
        • Students have to use MS Office

          If you are a student, MS Office is ALL you can use.
          My professor wouldn't even touch one of my OpenOffice files.
          • Really? He shouldn't be called a professor then.

            Probably the whole academic fraternity needs to review their attitude and check what is missing in the alternative options. A professor who is unable to figure out a simple office suite is a disgrace. Sorry for you man. That is all I got to say.
          • Our school system switched to Google Docs.

            My sister & her husband works at the local grade school & Jr High and they were telling me that their IT dept switched everything over to GoogleDocs last year. So change is happening.
          • Huh?

            Even though MS Office will read open office files? Must have been ine cranky old fart.
      • Not always available...

        The university I attended last year offered a lot of Microsoft sofware for cheap or free, but NOT Office. Windows 7 Professional - free. Visual Studio 2010 Enterprise Edition - free. Microsoft Office - full price. Luckily I had a nearly free copy through my job, but I got stuck using Google Docs most of the time because very few of the other students had Office. By the way, Google Docs SUCKS!!!
        • Google Docs used to rock

          I beta tested Google Docs back before it was first released, and it was pretty much Office 2003 put online. It was amazing. Then I'm assuming Microsoft complained, so now it sucks.