Microsoft's new subscription-based model for its Office productivity suite has a price tag that initially seems appealing for home and small business users… but is the bottom line cost really a savings for everyone?
It's no secret that over the years, the real cash cow for Microsoft hasn't been its venerable Windows operating system, but rather the bountiful profit margins it enjoys every time it sells a box full of Microsoft Office.
Running The Numbers
One reason is the steep retail prices for the package. Indeed, even with Office 2013, the retail price for the top-level edition, Office Professional, goes for a hefty $399.99. Office Professional gets you Word, Excel, PowerPoint, OneNote, Outlook, Publisher and the yes-it's-still-alive database known as Access.
At $400 a pop, that's a chunk of serious change for small businesses that might not be big enough to qualify for multi-seat license discounts. The next-highest offering, Office Home and Business, which drops Publisher and Access, runs for $219.99, a bit more reasonable.
Drop Outlook and the pricing gets even friendlier: $139.99 for Office Home and Student. Frankly, if I were going to buy Office for my home, this would be the one I would get, because my mail and calendaring is handled by Google and there are better desktop publishing tools and databases out there than Publisher and Access, respectively.
The Subscription Alternative
Into this pricing mix comes Office 365 Home Premium, which will set you back for $99.99/year. For a low, low $8.25 a month, you can get online access to the all of the tools in the jam-packed Office Professional, plus a 20GB SkyDrive cloud-storage account and 60 minutes of Skype calling a month. Oh, and that's for up to five PCs/Macs.
That seems like too good a deal to be true. What's the catch?
Well, let's remember the reason Microsoft is getting in the subscription business in the first place: its prized Office revenue has been drying up lately as fewer users are upgrading to new versions of Office, or are turning to alternatives like LibreOffice or Google Documents. Switching to a subscription model helps keep the revenue stream steadier in times of declining Office purchases.
With that in mind, it seems like there is going to be a catch. But analyzing the costs alone, there seems to be a real deal going on here. Breaking out a hypothetical situation for five PCs using each flavor of the Office releases for three years, the costs break down to:
Office 365 Home Premium: $299.97
Office Home and Student: $699.95
Office Home and Business: $1,099.95
Office Professional: $1,999.95
One Is The Most Expensive Number
So, if you're working with multiple PCs, the subscription plan is definitely a better deal. Care should be taken, though, for users with only one PC. Over the same hypothetical three years, those costs break down this way:
Office 365 Home Premium: $299.97
Office Home and Student: $139.99
Office Home and Business: $219.99
Office Professional: $399.99
Unless single-PC users truly covet the desktop publisher, database and other gimcracks tossed into Office 365, then Home and Student or Home and Business are better deals over three years. Heck, even over just two years, Office 365 is still more expensive than the offering most Office users really need, Office Home and Student.
The Inevitable Caveats
There is, as one might expect, quite a bit of comparing apples and oranges here. Office 365 will update as time goes on, while the boxed sets will stay the same for as long as you own them (allowing for service pack releases, of course).
That might be balanced by the fact that the Skype account just offers an hour of calls per month - bust that limit, and suddenly your monthly bill is not static anymore. And Mac users are out of luck if they want to use OneNote, Publisher or Access on Office 365.
Plus, there are still lots of questions on how closely Microsoft will be monitoring the usage of the Office 365 subscriptions. As ReadWrite's Mark Hachman revealed last week, the answers are still not clear.
Based on price alone and assuming the most vanilla interpretation of Microsoft's pricing model, if you are really set on using Microsoft Office and have multiple PCs in your home or business, it makes sense to try the Office 365 option, as long as you can manage Skype calls and assure your Internet connection is rock-solid.
But if you're a single PC/Mac user, you could stay with the old-fashioned install-the-application options and save yourself quite a bit of money over time.
Image courtesy of Microsoft.