Office 365: Embracing Software by Subscription

Instead of paying once for the basic world processing and database programs you use every day, how would you like to keep paying, month after month, for the privilege of using them? Microsoft is betting that’s actually going to sound like a good deal to its users.

The dominant workplace software company is trying what ZDNet blogger Simon Bisson refers to as a “bet-the-company strategy” in rolling out Office 365 not as software-plus-services but as fully functioning software as a service, with installed software as a minor piece of the deal.

Bisson notes that part of what makes this a big leap is Microsoft’s plan to let resellers bill customers directly for subscriptions to the cloud version of the software suite, Office 365 Open rather than handling the cloud service through a revenue sharing agreement.

Meanwhile, though, observers are wondering what this will mean for consumers. The current version of Office 365 includes various subscription plans for businesses, from $4 per user/month for a simple email-and-calendar setup to $20 per user/month for full access to Office programs both online and off plus hosted voicemail support, unlimited email archiving and other perks.

That’s all well and good for corporate users, but getting individuals to pay for a subscription to software is a different matter. PC World rounded up expert opinions on the subject and averaged their opinions out to predict that consumers won’t pay more than $6 a month for Office 365—and they’ll want to be able to install copies of the software on their computers. Even at that price, it might not be a great deal. PC World breaks down the math like this: The average customer keeps their software for five years. Office Home & Student 2010 costs $125 at a discount on Amazon and includes three licenses. That comes to $8.33 per license per year.

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