Office is one of the great gushers of profits in the software industry, so it is noteworthy when Microsoft starts fiddling with how it charges for its suite of productivity applications.
On Tuesday, the company began what it called a reinvention of its Office product for consumers. Users will now subscribe to the software for a $100 annual fee, rather than buying it outright as they have for years. While Microsoft is still offering the more conventional option of buying a “perpetual†version of Office for the home â€" prices start at $140 â€" it’s clearly betting that it can get most of its customers to move to the new model over time.
“I would say in 10 years, the majority of customers, perhaps all customers, will be in a subscription relationship as opposed to a perpetual,†Kurt DelBene, president of Microsoft’s Office division, said in an interview.
Why fork over $100 for Office each year, rather than make one payment of $140 Perhaps more pointedly, why pay anything at al when Google offers online alternatives to Word, Excel and PowerPoint that are free for basic versions and cost only $50 a year for versions with extra features
Microsoft justifies the price for the subscription version of Office, called Office 365 Home Premium, by adding some flexibility for households with multiple computers. A subscription comes with the rights to install the software on up to five Windows and Mac computers. If you’re using a computer outside the home that doesn’t have Office on it, you can download a version of the software from Microsoft’s site that deletes itself from the computer when you’re finished.
Office subscribers also get extra online storage through Microsoft’s SkyDrive service and 60 minutes of free Skype phone calls. Microsoft also says it will up! date the subscription version of software with new features before it updates the version that people buy the old-fashioned way.
There is one glaring omission in the new Office offering: support for the iPad. Although Microsoft has a hush-hush development effort to bring its major Office apps to Apple’s tablet, the company hasn’t done so yet. The company has released one Office app, OneNote, for the iPad and says people can do light editing of Office documents through versions of the Office apps that run through the iPad’s Web browser.
Still, there are undoubtedly many users who would love to have an authentic version of Office on their devices, given how popular the iPad is becoming in the workplace.
Mr. DelBene said Microsoft had “nothing to announce at this point†when asked when the company will bring the complete version of Office to the iPad.
As for Google, Mr. DelBne said it has not “in any way diminished demand†for Office because Microsoft’s applications are “just so far beyond the capabilities that are in those alternative products.†As an example, he cited a feature in Excel that analyzes a batch of numbers selected by a user and automatically recommends the best way to represent the data in a chart.
Despite Google, Mr. DelBene said, “we think that we’re on track for Office 365 to be one of the fastest-growing businesses in the history of Microsoft.â€
