The new Microsoft Office is here. As with the previous versions, you can get Word, Excel, PowerPoint and more as a locally installed suite of applications or as Office 365, a cloud-based subscription. However, choosing between Office 2013 desktop software and the new Office 365 is a dramatically different decision than in the past.
This time, there is virtually no decision to make. Comparing Office 2013 to Office 365 is an exercise in semantics; Microsoft has significantly stacked the deck to favor one over the other.
There is a clear distinction between the two options. Office 2013 describes only the desktop applications. By contrast, Office 365 is a Web-based platform that pairs the Office applications with cloud storage. In the past, though, the Office 365 versions of the software had limited features and capabilities compared to the full desktop versions, and if you didn’t have an Internet connection you didn’t have Office.
With the new versions of the productivity suite, though, Office 2013 vs. Office 365 is a smoke-and-mirrors debate. Office 2013 is more expensive than Office 365, and the license is only good for one machine. If you only need the core applications (Word, Excel, PowerPoint, and OneNote) you can get Office 2013 Home & Student for $140. Throw in Outlook, and you get Office 2013 Home & Business for $220. Office 2013 Pro adds Access and Publisher, all for $400.
Office 365 comes in two flavors: Office 365 Home Premium for $100 per year and Office 365 Small Business Premium for $150 per year. Both come with the full Office 2013 Pro software for your PC, but there are key differences. Up to five people can use Office 365 Home Premium on up to five devices, with each user getting an Office experience customized to their own Microsoft ID.
Office 365 Small Business Premium also comes with five licenses, but billed per user per year. Each user can install and use Office on up to five PCs, but the licenses can’t be shared with other users. Office 365 Small Business Premium also includes a managed Microsoft Back Office environment including Exchange, SharePoint, and Lync.
Depending on how many computers and devices you want to install Office 2013 on through Office 365, and which version of Office 2013 you’re comparing to, it will take somewhere between one and a half to 20 years ($400 multiplied by five to install Office 2013 Pro on five machines comes to $2000—or 20 years of Office 365) for Office 2013 to become the more affordable choice.
The only scenario that truly makes sense for Office 2013 is if you only need the software in Office 2013 Home & Student, and only on a single PC. In that case, you can spend the $140 and be done. Once you throw in a second PC, though, or if you need the additional tools like Outlook, Access, or Publisher, the math is heavily skewed in favor of the Office 365 subscription.
The beauty of Office 365 is that you get more than just Office 2013 for your money—it also comes with benefits that Office 2013 lacks. It comes with an additional 20GB of SkyDrive storage and 60 minutes per month of international Skype calls. Office 365 also has a new feature called Office On Demand that enables you to stream virtualized versions of the full desktop software to any Windows 7 or Windows 8 PC.
But, even for other platforms or mobile devices there are Web-based versions of the Office applications, and as long as you store your files in SkyDrive you can access them seamlessly from virtually any Web-connected device. The world doesn’t end if your laptop is stolen or destroyed, and you can still edit a crucial client presentation even if you don’t have your PC with you.
Even if you only need the applications in Office 2013 Home & Student, it would cost $700 to put that software on five machines, and it would take seven years to break even on the cost of the Office 365 subscription. By that time, there will be a new version of Office (or two, maybe three). If you buy Office 2013 Home & Student, you’ll still have it in the year 2020. But, if you subscribe to Office 365 you will always have the most current version of Office available.
Microsoft has set things up so that the decision is already made. You are free to purchase Office 2013, but Office 365 has very clear advantages, and it makes more sense financially in almost every scenario.
Note: When you purchase something after clicking links in our articles, we may earn a small commission. Read ouraffiliate link policyfor more details.
Small and Medium Business
Tony is principal analyst with the Bradley Strategy Group, providing analysis and insight on tech trends. He is a prolific writer on a range of technology topics, has authored a number of books, and is a frequent speaker at industry events.