Office 365: To subscribe or not to subscribe

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Unless you spent the past week offline, there’s really no way you could have missed the news that Microsoft released iPad versions of Word, Excel, and PowerPoint. There’s also no way you could have missed the uproar over the pricing for the three apps.

But just in case you did miss the pricing uproar, here’s a bit of background on the issue. The apps are free to download and can be used to view Word, Excel, and PowerPoint files (though installing a 400MB app to view a file seems like overkill). However, you can’t use the apps to edit existing files or to create new files without buying a subscription to Office 365, Microsoft’s online Office-everywhere service. And that subscription will cost you (assuming “you” are a typical home user, and not a business or college student) $100 per year. Suddenly those free apps don’t look so free any more.

Satya Nadella Office iPad launch

Microsoft CEO Satya Nadella at the Office for iPad launch event.

Should you pay the $100 a year for create/edit access in the iPad Office apps? The answer to that question really depends on how you use the Office apps on your computer(s) and/or tablets, and how many computers are in your household.

Note that I’m not addressing whether software subscriptions are a good or bad thing in general—that’s another subject entirely. I’m also not addressing whether $100 is too much, too little, or just right, because the answer to that will vary according to each person’s economic situation. I’m merely trying to address which types of users should consider paying the annual subscription fee, whatever it might be.

So should you sign up for Office 365? First, let’s cover two easy “yes” and “no” cases.

I need access to the full Office suite on an iOS device

Somewhat obviously, if you need access to the full Office suite on your iOS device, then you’ll be ponying up the $100 per year charge, as that’s the only way to get full access to Office apps on your iOS device. (Note that Amazon is currently selling a one-year subscription for $67.15. If you’re in this category, buying now will save nearly 33 percent on your first year’s cost.)

Word for iPad
Word for iPad

Yes, Apple offers alternatives via its suite of iWork for iOS apps (free with new iOS devices, $10 otherwise). But for those who need the highest level of Excel, PowerPoint, and/or Word feature compatibility, the iWorks apps are close, but not close enough, to fill the need.

Microsoft wants users on Office 365, and they’re using Office for iPad as the carrot to get them there. You can grumble about the strategy, you can complain about the cost...but if you absolutely need Office on iPad, you will be signing up for Office 365 at $100 per year.

I need access to an “Office-like” suite on iOS

If you don’t need 100 percent Office compatibility and only rarely need to create/edit Office-like documents on your iOS device, then there are any number of better options than Microsoft’s subscription plan. The aforementioned iWork for iOS apps may be all you need, given they can output Office-compatible file formats when required.

Keynote for iOS

Apple's Keynote for iOS

If you don’t need the full suite, there are also individual apps out there for presentations, text editing, and spreadsheets, any one of which may meet your needs. (If only the App Store had a “try before you buy” plan, you could test them to see which worked the best. But they don’t, which is why I recommend buying apps that also offer traditional free trials via their developer's websites.)

So much for the clear-cut buckets; this next one is the most complicated, even though it seems simple at first.

I use Office at home, but never on iOS devices

Given you have no interest in Office on your iOS devices, you may think there’s no reason to sign up for Office 365. And that may be true—but it may also be false. It really depends on how many computers you have in your household, and how often you refresh your Office installation.

I use Office at home on just one Mac

If you’re just one person, working on one Mac, then things are pretty simple: there’s no need for Office 365, even if you upgrade Office each time there’s a major release. Office 2011 for Mac is $140, or $220 if you need Outlook. (These same prices apply to the Home and Business versions of Office for Windows.)

On the Mac side, at least, Office isn’t updated all that often: Office 2011 was released in October of 2010. Assuming a new release comes out in 2014 (and you want to upgrade to the latest version), you could expect to use it for at least the next three years, for all of $140. Compare that to the $300-plus you’d pay for the subscription over those three-ish years, and there’s absolutely no reason to subscribe; just keep using the standalone version.

I use Office at home on multiple Macs

Excel for Mac 2011

Excel for Mac 2011

Things get murkier when you add multiple computers to the mix, because of Microsoft’s licensing: Office is only sold with single-machine licenses. If you have two Macs, your upfront cost is now $280. That makes the three-year $300 subscription cost comparison a lot closer to break even. What if you’re married, and/or have kids, and they have a computer or two? Now you’re up to four computers, and a $560 up front cost. With three or four computers, the decision on whether to subscribe or not is no longer black and white.

If you’re still using Office 2008 (released in January 2008), then the subscription probably doesn’t make economic sense: you run through two or more product cycles between upgrades, so your up front cost is amortized over six or more years. Even with four computers, you’d be only paying $560 after six years’ of use, versus $600 for six years of Office 365.

But if you do keep your Office licenses current, the subscription looks more inviting with three or more computers. Consider a family with three Macs, all of which have had Office 2008 and Office 2011 installed. Assuming the same $140 price for Office 2008 as Office 2011, the total cost would have been $840 (half for Office 2008, half for Office 2011) over the last six years.

If the Office 365 subscription option had been available at Office 2008’s launch, the total cost for those same six years would have been $600, or a savings of $240. In addition to saving money, you would’ve been able to install Office on two additional computers, and up to five tablet devices, for no additional money. You’d also get 60 minutes of free Skype calls each month, and 20GB of SkyDrive cloud storage for each of up to five users.

So now, the decision isn’t quite so easy, is it? The subscription offers more features, covers more devices and users, and costs substantially less. Subscribing seems like the obvious choice with three or more computers and regular Office upgrades, right?

Office Mac 2011

Office Mac 2011

It does, but there’s one more key question you need to answer first: Do you intend to keep subscribing? If you do, then yes, subscribe.

But if you’re not sure if you’ll keep subscribing, then it’s a tougher decision still. Because, like leasing a car, when you subscribe to your software, you don’t own anything at the end of the subscription term. Let the subscription lapse, and you’ll find yourself unable to edit your Office documents. So if you stop subscribing, at that point you’ll need to purchase “real” copies of the software, which will obviously increase your costs.

If you are going to stop subscribing at some point, it’s best to do it when a major release has just come out—that way, when you purchase the “real” apps, you can expect to get three or more years’ use out of them before the next major release.

Bottom line

Whew. That's a lot of work to decide if an Office 365 subscription is right for you. Boiling it down to its simplest essence:

  • Subscribe if you need Office on your iOS devices, as it's the only way to get it.
  • Do not subscribe if you have no need for Office on iOS, and have only one Mac.
  • Possibly subscribe if you have two or more Macs, depending on how often you upgrade Office and your likelihood of continuing to subscribe.

Things were certainly much simpler in the days before software subscriptions, at least in terms of making purchase decisions. For me, the Office 365 subscription makes sense, especially if I can get it for 33 percent off via Amazon each year. For you, well, you'll have to decide for yourself based on your own situation; hopefully this guide makes it a bit clearer.

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