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Microsoft announces Office 2013, Office 365 pricing

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Microsoft has announced pricing for the next version of its Office productivity suite, and judging by its aggressive new licensing structure, it would much rather have customers sign up for the new Office 365 subscription model than buy the software outright.

"Subscriptions open a host of possibilities," reads a post to Microsoft's Office team blog on Monday, "and subscribing to Office 365 will be the best choice for many – especially families, people with multiple devices and small businesses."

Redmond is still offering shrink-wrapped versions of Office 2013 for those who prefer the old model. The suite will be available in three configurations: Home & Student for $139.99, Home & Business for $219.99, and Professional for $399.99.

All three bundle the same core components, including Word, Excel, PowerPoint, and OneNote. The Home & Business edition adds Outlook, and the Professional edition throws in Publisher and Access.

By comparison, an Office 365 subscription includes everything that comes in the Office 2013 Professional boxed version, plus some extras. But where Office 365 really differs from the retail Office 2013 product is in how it is licensed.

Each retail copy of Office 2013 carries a strict one-device license. Once users install the software on a single PC, it can only ever be used on that one device. An Office 365 subscription, on the other hand, comes with a license to install the software on up to five Macs or PCs at the same time, giving users more flexibility. (Until Redmond releases a new version for OS X, Mac users are licensed to use Office 2011.)

In addition, Office 365 gives users access to Office on Demand, a new feature that allows subscribers to download temporary copies of the Office applications to PCs via application streaming. No installation is necessary, and the applications disappear from the computer once the user is finished with them. In effect, Office 365 subscribers always have access to the full Office applications, no matter what computer they are working on.

There will be two different Office 365 subscription packages available – not counting any enterprise offerings, which Microsoft will announce later – and each will include a different bundle of online services that aren't available to customers who purchase the retail Office 2013 product.

Office 365 Home Premium, like it sounds, is aimed at families and home users who want to be able to run Office on a few devices. In addition to the Office applications, it bundles 20GB of Microsoft's SkyDrive cloud storage and 60 minutes of Skype calling per month. It costs $99.99 per year, and at that rate, it will be four years before the customer has paid the equivalent of a single retail Office 2013 Professional license.

Office 365 Small Business Premium is pricier at $149.99 per year, but it includes more goodies for business users. For starters, subscribers get access to a hosted Exchange Server, complete with a 25GB Outlook mailbox per user, shared contacts and calendars, and scheduling and task-list tools. Each organization gets 10GB of "professional-grade cloud storage," plus another 500MB per user. Businesses can also host online meetings complete with HD video, and they can even host a public-facing website on Microsoft's servers.

Note, however, that licensing for the Small Business Premium edition is slightly different from that of Home Premium. The Small Business version is licensed on a per-user basis, meaning that although each subscriber is allowed to install the software on up to five machines, all five must belong to the same user. With the Home version, each machine can belong to a different member of the same household.

Redmond has also said that Office 365 customers will gain even more benefits over purchasers of the retail Office 2013 editions as time goes by.

"We will update Office more frequently to support new scenarios, and subscribers will always be current with the latest innovations," the pricing announcement reads. "Subscriptions also open new possibilities like integrating web services into Office in ways never before possible; in this release, we've added Skype calling minutes and SkyDrive storage, and in the future, we'll do more."

Microsoft is so convinced that customers will prefer the subscription pricing model once they try it, in fact, that it will even be giving away free subscriptions to new Office 2010 customers. Beginning October 19, anyone who buys Office 2010 or Mac Office 2011 will be eligible for a free year of Office 365 Home Premium or a three-month trial of Office 365 Small Business Premium. ®

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