Microsoft is betting big on Office 365, which for the first time will feature plans aimed at consumers and small businesses that let them install copies of the suite on their computers and other devices, not simply run scaled-down Web-based apps. Office 365 Home Premium and Office 365 Small Business Premium are, experts have argued, key to Microsoft's goal of motivating customers to ditch perpetually-licensed software for a pay-forever model that will both boost and stabilize the company's Office revenue by untethering it from the every-few-years upgrade cadence.
Office 365 Home Premium will let a household run Office on up to five devices, which Microsoft has defined as traditional desktops and notebooks -- Windows or OS X systems -- as well as tablets and smartphones. Office 365 Small Business Premium, meanwhile, will work like the current enterprise plans, allowing each worker to run Office on up to five of his or her devices.
The price: $100 annually per household for Home Premium, $150 annually per user for Small Business Premium.
By tying Office Mobile for iOS and Android to Office 365, Microsoft both makes the subscription plans more economical and creates a carrot to convince consumers and small businesses to follow in the footsteps of enterprises, which typically pay for software through annuity-style licensing deals like Software Assurance.
Sans Office on iOS and Android, Office 365 may not make financial sense for most households or small businesses: Computerworld's calculations show that a household or business worker must use four or five of the allowed copies to bring the per-year, per-license cost of Office 365 below that of the same number of perpetual licenses.
Last month, one analyst called that "iffy, very iffy," even in a technology-oriented household or business.
But by adding iOS and Android, Microsoft would make it much more likely that Office 365 customers could, in fact, equip more than three devices with the suite. Those two operating systems own the lion's share of the smartphone and tablet markets. Because Windows-based devices have minuscule market shares, the inclusion of iOS and Android could also help Office 365 gain traction until Windows RT and Windows Phone 8 grow their shares.
And if Office Mobile does require Office 365 -- if the apps aren't available for purchase separately -- Microsoft creates a huge incentive for users to subscribe, not only boosting sales but also attracting customers who otherwise might never have considered the rental model or even the new Office.
Ullman was optimistic that consumers would, if not in the short term, then in the long, shift to the Office 365 model.
"It's how consumers are consuming software now," he argued. "They're used to paying a subscription license, especially younger consumers, and they're moving away from paying up front for a perpetual license. They're using software, and if it doesn't work for them, they move to something new. I see [Office 365] as Microsoft's way of being part of this."
Ullman was adamant that the rental model was attractive to younger users. "The whole concept of upgrading is foreign to them," said Ullman. "Younger users don't even know what an upgrade is, since most of their software is updated all the time."
Consumers are, however, a small part of Microsoft's Office business, which last quarter brought in over $5 billion in revenue, or more than 34 percent of the company's total for the period. Microsoft makes most of that not from sales of Office to consumers, but on sales and volume licensing contracts to enterprises.