Office 365 subscriptions account for 25% of suite's U.S. retail sales

Analyst flips the numbers, points out that 3 out of 4 consumers prefer the old-style 'perpetual' license

By , Computerworld |  Software

Office 365 has accounted for about 25% of all Office retail unit sales in the U.S. since its introduction two months ago, but the new "rent-not-own" strategy has not boosted overall sales, an analyst said today.

Stephen Baker of the NPD Group, a research firm that regularly surveys U.S. retailers for software sales figures, noted that the split between Office 2013 and Office 365 is running about 3:1 so far, in the former's favor.

"Office 365 has accounted for about 25% of the [unit] volume," said Baker today. "Office 2013 has had about three-fourths of the retail business."

"At first blush, those numbers sound reasonably good," said Wes Miller, an analyst with Directions on Microsoft. "But it's kind of like Surface numbers. It's hard to tell whether it's good or not, since we don't know what [Microsoft] was shooting for."

Office 2013 is the traditional kind of software customers have bought for decades, a "perpetual license" that is paid for once, but then gives the buyer the right to run the software for as long as he or she wants.

Office 365, on the other hand, is a line of subscription plans that Microsoft expanded this year, and for the first time offered to consumers. Under the Office 365 model, customers can purchase a one-year subscription at retail, but after that, must pay to Microsoft when that year's up if they want to keep running the software.

If the subscription expires, the Office software -- Office 2013 for Windows or Office for Mac 2011 for OS X -- that's installed locally drops into a reduced-function mode that allows viewing and printing of existing files, but bars editing or the creation of new documents.

Office 365 Home Premium, the version targeting consumers, costs $100 annually, and lets users install Office on up to five Windows PCs or Macs in the household.

[Use our Office calculator to determine the better deal -- Microsoft's Office 365 subscription or the traditional buy-now-use-forever licenses.]

Although Microsoft sells Office via its online market and its own chain of brick-and-mortar outlets, other retailers, both electronic and physical, also carry Office 2013 and Office 365., for example, sells a one-year subscription to Office 365 Home Premium for $99, while Best Buy deals it for the list price of $99.99.

"All the major retailers are selling Office," said Baker. "It's the kind of product you want to have if you're still selling software."

Baker's breakdown of Office 2013 and Office 365 was the first indication of how the latter has done since its Jan. 29 debut. Microsoft, for instance, has been mum on sales.

Originally published on Computerworld |  Click here to read the original story.
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