Microsoft revealed some big news today. The latest version of Office is the fastest selling ever--averaging one copy sold every second since its launch. Office 365 Home Premium--the subscription model for the Microsoft Office productivity suite targeted at consumers--has surpassed the one million user mark in only 100 days.
The pace of Office 365 Home Premium subscriptions puts the service in good company--Microsoft reached the milestone faster than Foursquare, Facebook, Dropbox, Spotify, and Hulu Plus. The success of Office 365 may come as a shock to Microsoft naysayers who criticized the company for pushing the subscription model so aggressively.
Lingering confusion
I can understand some of the initial backlash against Office 365. I blame Microsoft. Its patently poor marketing didn't do any favors for the new Office 365.
The new Office 365 is completely different. The new Office 365 uses the desktop suite of applications by default. However, it does also still provide online capabilities such as Office On Demand, which allows subscribers to stream full versions of Office applications to just about any Windows PC, and tight integration with SkyDrive.
Despite the differences between the original Office 365 and the new Office 365, many critics continued to cite the need to be connected online as a primary reason to avoid Office 365. Microsoft failed to clearly convey the features and benefits of the new Office 365, and keeping the same name as its predecessor simply added to the confusion.
It's clearly a better deal
You'd think that the confusion, and the general aversion to subscription-based software would doom Office 365 to fail. Why then is the new Office the best selling ever, and why was Office 365 Home Premium able to achieve the one million subscriber milestone so quickly? Simple: math.
You can still buy the traditional Microsoft Office desktop applications as a standalone suite without the Office 365 subscription. Office 2013 Home & Student will set you back $140. If you want Outlook, you have to move up to Office 2013 Home & Business for $220. Need Access or Publisher? In that case, you'll have to spend $400 for Office 2013 Professional.
No matter which version of the desktop suite you choose, the license is only valid for a single PC. Microsoft initially tied the license to a single computer. If your PC dies, or burns up in a fire, you'd have to buy a new copy of Office. After significant backlash, Microsoft backed off that policy and will allow users to reinstall Office on a new PC, but it is taking a strict stance to guard against software piracy.
Contrast that with Office 365. The $100 per year subscription for Office 365 Home Premium includes licensing for the full Office 2013 Pro for up to five machines--Windows or Mac OS X. The five licenses are not tied to a specific user, and can be shared with all of the family members in a household. Each person will have their own SkyDrive, and settings tied to their unique Microsoft account.
That's a $2,000 value (five licenses of Office 2013 Pro at $400 each) for only $100 per year. Even if the family members only really need the applications in Office 2013 Home & Student, it would still cost $700 to purchase licensing for five systems. That means that a family can subscribe to Office 365 Home Premium for seven years before it begins to be a more expensive proposition than buying Office 2013 licenses without the subscription. For that same $700, the Office 365 Home Premium subscription also includes Office On Demand, an additional 20GB of SkyDrive space for each user, and 60 minutes per month of Skype calls. And, the Office 365 subscription comes with automatic updates to the latest version of Office, while purchasing the desktop software will require buying it again when the time comes.
Office 365 is simply a better deal for the vast majority of scenarios. If someone only needs Office 2013 Home & Student, and they know they only need one copy, then the $140 purchase may make more sense than a $100 per year subscription. But, for almost every other situation Microsoft has set it up in a way that the subscription model is a bargain compared to buying the standalone Office suite.
