Microsoft's moves foreshadow price hike for Mac Office

New Office 365 subscription plans will be tough sell unless company raises prices for Office for Mac 2011, ditches multi-license discounts
  • (Computerworld (US))
  • 24 September, 2012 17:55

Microsoft has announced price increases for its Windows Office suite of as much as 17%, but its plans for Office on the Mac remain a mystery.

The company declined to answer questions about Office for Mac 2011's future pricing and which versions the company will continue to sell.

Although Microsoft will launch the new Office 2013 for Windows users in the coming months -- most signs point to a retail launch in late January or early February 2013 -- it has no immediate plans to significantly upgrade Office for Mac 2011 to synchronize the two editions.

Still, the new price points and editions planned for Office 2013 on Windows -- and importantly, the new Office 365 subscription deals Microsoft will launch -- portray Office for Mac 2011 as out-of-step with the company's strategy.

Currently, Office for Mac 2011 and Office 2010 (the latter for Windows) are priced identically and come in similar editions.

Both versions of the suite are priced at $120 for a one-license copy of Home & Student, the entry-level SKU, or "stock-keeping unit." For $150, customers can purchase a three-license package of Home & Student.

Meanwhile, Home & Business, which includes the Outlook email client, costs $200 for a one-license copy and $250 for a two-license pack.

But Microsoft will be raising prices of both Home & Student and Home & Business on Windows with Office 2013, and dumping the multi-license offers at the same time.

Office Home & Student 2013 will cost $140, a 17% increase, for one license; Office Home & Business 2013 will run $220, a 10% boost, for a single license.

And rather than continue to sell multi-license versions for Windows, Microsoft will steer consumers and small businesses to a pair of Office 365 subscription plans that start at $100 per year for the right to install up to five copies of Office on Windows PCs and Macs.

The problem for Microsoft is that if it does not raise prices of Office for Mac 2011, and ditch the two- and three-license packages, it will have a very tough time convincing Mac owners to swallow the subscription plans.

According to Computerworld's analysis, Office for Mac 2011 current single-license prices are the better buy than an Office 365 subscription over a five-year period if the user wants to equip between one and four Macs with the suite. Only when a consumer needs to install Office on five Macs -- or in some instances, when he or she wants Office on a mix of Windows PCs and Macs -- does Office 365 cost less on a per-license, per-year basis.

The case for Office for Mac 2011 is even stronger if Microsoft retains its three-license Home & Student edition after launching Office 365.

To equip three Macs with Home & Student, consumers fork out just $150, or $50 per license. Over a five-year span -- the average length of time between Office upgrades -- the cost comes to $10 per year, per license.

Current Office for Mac 2011 prices make the upcoming Office 365 subscription plan uneconomical unless customers install all five allowed copies of the suite. (Data: Microsoft.)

Using Office 365 to install the application suite on the same three Macs, however, would cost $33.33 per year per license, or more than triple Office for Mac 2011.

Even if Microsoft scrubs the multi-license SKUs, Microsoft would be hard-pressed to make Office 365 attractive if it does not also raise prices of the single-license copies.

Four copies of Office for Mac Home & Student 2011 at current prices would cost $480, less than the $500 for five years of Office 365 Home Premium, the SKU that gives Mac owners access to the suite. The per-year, per-license breakdown: $24 for four copies of Office for Mac 2011 versus $25 for Office 365 if just four of the five allowed installs are used.

Only when five installs are factored in over a five-year period does Office 365 come out cheaper: $20 compared to $24 on a per-year, per-license basis.

Microsoft, of course, faced the same pricing dilemma with Office 2010 on Windows, and did raise prices of Office 2013 single-license SKUs to make them unappetizing when compared to the Office 365 "lease-not-own-software" plan.

If Microsoft has decided to bump up prices of Office for Mac 2011 -- and scratch the multiple-license SKUs -- one appealing date to do so would be on Oct. 19. That's when Microsoft will kick-off an upgrade program for buyers of Office 2010 and Office for Mac 2011.

"Starting October 19, people who purchase Office 2010 or Office for Mac 2011 will qualify to download, for free, one year of Office 365 Home Premium or the equivalent Office 2013 offering, when available," Microsoft announced last week.

In that statement, Microsoft made no mention of the Mac's $150 three-license Home & Student or the $200 two-license Home & Business, or how buyers of those SKUs would be compensated for their purchases on and after Oct. 19.

The omissions may be a clue that Microsoft plans to dump those editions, and, like its move on Windows, boost prices for Office on the Mac at the same time.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed. His email address is gkeizer@computerworld.com.

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