Marco.org

Microsoft to sell Office subscription for $70/year

Microsoft Corp. will begin selling its Office programs to consumers on a subscription basis starting mid-July, in a bid to reach thrifty PC buyers who would otherwise pass on productivity software.

…where “pass on” means “pirate”.

The Microsoft Equipt bundle … includes Word, Excel, PowerPoint and OneNote, plus OneCare and a handful of existing free Windows Live applications. Buying those programs the traditional way would cost about $200 … Under the subscription model, upgrading to a new version is included in the annual cost.

$70 per year indefinitely, or $200 once, for a product with a 2- to 4-year update cycle that most people don’t update to every new version? That’s not a very good deal.

(Note that the lack of Outlook and Access make this very unfriendly to business users, so this is clearly targeted at the home market.)

Microsoft has been warming people up to the idea of subscription software pricing for years (this was one of the original intentions of the .NET brand). There are a number of advantages to them:

• They get paid a flat rate regardless of whether they make any updates. Notice how their update schedule for many products has slowed:
  • Windows: 1998, 2000, 2001, 2007
  • Office: 1999, 2001, 2003, 2007
• They don’t need to add compelling new features in updates. The incentive to innovate and improve is completely removed. They especially need this for Office, for which most people don’t use most features introduced in the last decade.
• There’s no longer an incentive to schedule releases to boost specific quarterly or annual earnings.
• People don’t often buy every version of Office — many skip versions because the upgrades are expensive and usually not very compelling.
• They can enforce timebomb versions and mandatory updates. (Imagine if they forced all Windows XP users to update to Vista.)
• They will make more money per paying user, on average, over time.
• People often forget about subscriptions and continue to automatically pay for them for months or years after they’ve stopped using the service.

The benefits to the consumer are:

• Lower initial cost.

Great. Sign me up!