How Will Office 10 Subscriptions Work?

As Microsoft announced at Comdex last month, Office 10 will be available next year both on a subscription basis and in the usual retail package. This change raises many questions. How will Office 10 subscriptions work? How will the pricing compare to the cost of the full retail package? What will be the discount for updating from a previous version? Will you get a better deal if you pay up front for a multiyear subscription? Will the new PCs that your company buys come with Office 10 installed but the subscription not yet activated?

I've been using Office since Office 95. If you're like me and have kept up with each version of Office as Microsoft released it, then you've been working under something close to a subscription for several years. You paid the base price when you bought your first full version. Since then, you've been paying every so often for the next version, expecting that it would last at least a couple of years until the next one came along. That process isn't so different from paying up front for a two-year subscription.

Subscription-based software isn't a new idea. Many software vendors—particularly those with high-end products—offer a subscription that ensures the customer doesn't pay extra for new software versions issued during the term of the subscription. In general, this "future-proof" sort of subscription is an incremental add-on to the base price.

I once worked for a company that sold its software solely on a subscription basis, bundled with other services. The package included unlimited telephone support, which makes you wonder. What will the subscription package for Office 10 contain? Will the subscription be just another way of selling the same shrink-wrapped product, or will Microsoft throw in some extras to give users and companies an incentive to move to the subscription model?

Here's my list of things that might make an Office subscription more enticing:

  • Unlimited toll-free phone and Web-based product support.
  • Ability to subscribe to individual Office product components at a fair price. If you're already getting Outlook Client Access Licenses (CALs) with your Exchange license packs, will you have to pay for Outlook again when you subscribe to a full copy of Office 10? Until now, buying a full copy of one of the Office packages has made good economic sense for many companies. The right pricing on a subscription version might make it possible to save money by subscribing only to the components you need for each user. (Don't forget, though, to factor in the cost of managing the subscriptions.)
  • Automatic delivery of major service release updates and new versions free on CD.

If you've been watching the news from Microsoft over the past year, you already know that nontraditional pricing and delivery methods are getting more attention, and not just with the .NET initiative. You can get Office 2000 as a hosted application with various application service providers (ASPs), or you can get Exchange Server as a hosted application with the option of hosted Outlook 2000. You can even rent Office 2000 by the hour. The next time you're in New York, London, Amsterdam, Paris, Rome, or any of 10 other European cities, stop at the local easyEverything Internet cafe. This enterprise offers Office 2000 for rent for as little as $1.50/hour (or the local equivalent); see the Easyeverything site for details. The pricing is totally demand-driven. You pay more if the cafe is busy and many people are waiting in line for a seat at a computer. Dare I speculate whether some future version of Microsoft's subscription pricing model will also be traffic-driven? Maybe I can pay less for that copy of Excel that I use just once a month. Write me at [email protected] to let me know whether you're considering a subscription to Office 10.

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