Microsoft's Office 365 is a hybrid cloud and desktop competitor to Google Docs, a cloud-based application that is rapidly growing in popularity and apparently has been taking business away from Microsoft Office. The previous version of Office 365 always struck me as an "interim solution:" it met the specifications but required a computer science degree to use it. Yes, a determined and knowledgeable user can use Office 365 to write documents, create spreadsheets, and more, but the novice computer user will probably never try a second time. Office 365 also has a complex mix of both pricing and services with eleven different pricing plans. I don't know anyone who uses Office 365 on a regular basis although many of my acquaintances do use Google Docs frequently.
To be sure, Office 365 Home Premium is not the only version introduced yeserday. Anyone will still be able to purchase the non-cloud version of Office 2013 but at higher prices. The non-cloud version is aimed at commercial users. Home users are more price-sensitive, so Microsoft is pushing the cloud-based Office 365 Home Premium version to this group.
For $99.99 per year, Office 365 Home Premium provides Word, Excel, PowerPoint, OneNote, Outlook, Publisher, and Access, plus an extra 20 gigabytes of SkyDrive storage (in addition to the 7 gigabytes that everyone gets for free), plus 60 minutes of Skype calls per month to any telephones in North America. Office 365 Home Premium is licensed on a per-household basis so that one account can be shared by up to 5 users across any mixture of five PCs and Macs. As an example, for $99 per year you can use Office 365 Home Premium on your desktop computer, the laptop, the computer in your child's room, and two more systems.
On the downside, the user does have to be connected to the Internet to use all the functionality of Office 365 Home Premium. That's not much of a problem for most of today's users, but it can be an issue when riding on a non-wi-fi-equipped airplane or at any other time you are without Internet connectivity. Another question not yet answered by Microsoft is what happens to your data after your subscription expires. Actually, this shouldn't be a problem as everyone should always have their data backed up, both in the cloud and locally. That's true of both cloud-based and non-cloud-based applications; nothing changes. The problem is that millions of users don't make backups. Anyone who has only one copy of files is already asking for trouble, and the use of subscription-based cloud applications only increases the possibility of data losses.
The price of $99 per year may be more attractive than it first sounds. Not only does cloud-based Office 365 Home Premium cover up to five computers, but it also includes upgrades to future versions. If a new version of cloud-based Microsoft Office is released two or three years from now, users probably will be upgraded as long as they continue to pay the $99 annual subscription fee. Subscribers shouldn't ever have to pay for a new version, other than that subscription fees.
Office 365 Home Premium is still in beta, but Microsoft has said that the final version will start shipping to Windows RT users in November. The more capable, Intel-compatible versions seem likely to arrive some time later. Macintosh users will also receive Office 365 Home Premium. Starting October 19, anyone buying Office 2010 or Office for Mac 2011 will also qualify for an upgrade to the equivalent version of Office 365 Home Premium at an undefined future date.
For more information, you can find several hundred thousand online articles describing Office 365 Home Premium in detail if you start at http://goo.gl/1aXUY.
I suspect that the cloud-based version of Office 2013 will have limited success. In fact, most users will continue to use whatever word processors they already have installed on their systems. There is little incentive to upgrade to Office 365 Home Premium. However, as the years go by, most home users will upgrade their systems to new hardware every few years. When they do, moving an existing word processor to the new system may be inconvenient or even (in some cases) impossible. At that time, most consumers will look for new alternatives. While the cloud-based Office 365 Home Premium will be one of those alternatives and the Microsoft name will encourage some owners of new computers to sign up, the price of $99 per year still seems high when free alternatives are available from Google Docs and Zoho Docs. In addition, non-cloud-based office productivity suites will remain available from a number of vendors with prices ranging from free to $49.95 or so. Even better, that's a one-time purchase price, not an annual subscription fee.
My prediction: I am betting that market pressures will force Microsoft to lower the price on all of its versions of Office within two or three years. There will be too many free and low-cost alternatives available for Microsoft to continue selling licenses at a premium cost. If Microsoft does drop prices to match its competition, the company could remain as the premier supplier of office productivity software.
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