Microsoft Launches New Office Subscription Service

Jan 29, 2013

In the old days, when Microsoft Corp. unveiled new software you might have gone to the store, paid for it once, and brought it home in a box.

But with Microsoft’s new service unveiled Tuesday, Office 365, the box is gone. It’s been replaced by a digital subscription that allows you to get almost everything you need from the web. In a promotional video, Microsoft CEO Steve Ballmer said the service offers a “complete office in the cloud,” which he touted as a major leap forward.

The subscription costs $99.99 per year and allows users to install software on five computers and devices instead of the usual one. Files can be saved directly onto Microsoft’s cloud service, SkyDrive. Subscribers will get software updates right away.

“The subscription is the best value if you’ve got a lot of computers and you frequently update office,” said Wes Miller, a technology analyst with the research firm Directions on Microsoft.

According to Miller, Office 365 is meant to give users the benefits of a fully functional Office suite. It's also meant to provide the portability of working in the cloud, like Google Docs.

But Miller said not everyone will like the new service.

In the old model, if you buy the software, it’s yours to use forever. But a subscription is more like renting than buying. If you cancel your subscription, the software goes away. As for people who are accustomed to the box or even a download, "those people may be uncomfortable with this idea," Miller said. "If they let their subscription expire, it’s no longer your software.”

Miller said Microsoft wants more people to move towards the subscription model because it gives the company more stable and predictable earnings.

At the moment, consumers can still buy Office the old-fashioned way. But Microsoft says the box may not be long for this world. In a blog post, Ballmer predicted that “over time, the majority of the billion plus people using Office will be using the Office 365 service.”