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Originally published Monday, September 17, 2012 at 6:30 PM

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Microsoft to offer Office as subscription service

Microsoft pricing on one of its core products, Office, continues to evolve as the company announces what it will charge for the online Office 365 and offline Office 2013.

Seattle Times technology reporter

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For years, most consumers have bought Office either by purchasing a package containing a disc or by downloading it.

If Microsoft has its way, that's about to change.

On Monday, the company announced details and pricing for its upcoming version of Office. The biggest change is that, in addition to the traditional ways of buying Office, Microsoft is introducing Office 365 for consumers as a subscription service accessed online.

A single subscription of Office allows for multiple users and allows users to access their Office documents and programs across multiple devices.

Small businesses have been able to use Office 365 for a while now -- and still can through the Office 365 Small Business Premium version.

But this is the first time Microsoft is offering a consumer version, called Office 365 Home Premium. The cost per subscription is $8.33 a month (or $99.99 per year), which allows for it to be used on up to five PCs or Macs.

(The Small Business Premium version costs $149.99 per user per year, with each person allowed to use Office on up to five PCs or Macs.)

Users' documents will be stored by default on Microsoft's SkyDrive personal cloud service, but people can choose to store their documents instead on their computer's hard drive.

"With previous releases, customers expected a certain thing from us," acknowledged Clint Patterson, communications director of the Office division at Microsoft. "This is going to reset expectations.

"Subscriptions, for us, represents a really fundamental shift in how we think about Office, how we deliver value for our customers," he said. "Subscriptions allow us to deliver updates to customers multiple times a year. It means we can get updates to customers faster.

"We liken this to Netflix and Spotify," Patterson added. "It's roughly the same cost."

Microsoft is touting Office 365 Home Premium as likely the best choice for families and for people with multiple devices, especially given that Office 2013, the traditional Office software purchased via download or in a package, will not offer users the option of installing it on multiple devices. Users will be limited to using that traditional Office on one device.

Office 2013 will cost $139.99 for the Home & Student version and $219.99 for the Home & Business version.

The Professional version will cost $399.99.

"For a consumer, though you'll have to work your way to finding what works for you, if you have multiple devices, really you have one choice now," said Wes Miller, an analyst with independent research firm Directions on Microsoft. "Either you pay the subscription or you'll pay considerably more" for multiple versions of Office for your devices.

Moving to a subscription model is another step Microsoft is taking toward becoming a devices-and-services company -- something CEO Steve Ballmer said last week that he sees the company becoming in the next several years.

Xbox, for instance, is a gaming device but also offers Xbox Live subscription services for entertainment and gaming content.

Microsoft has wanted to offer consumer subscriptions "for a long, long time because it means steady, recurring revenue," Miller said.

Another possible boon is that it may make it easier for Microsoft to tout the benefits of Windows RT tablets, which will be sold with a version of Office. (Windows RT is the version of Windows 8 designed for devices running on power-sipping ARM-based processors.)

Unless a consumer needs some of the specific features offered in Office 365 such as Outlook, Publisher and Access, or more storage on SkyDrive, "the version of Office that you get for your subscription base as a consumer doesn't include any more services than you get with Windows RT," Miller said.

Because Windows RT devices (as well as Windows Phone handsets) come with Office already on them, they don't count toward the Office 365 subscription's five-device limit. (But that also means that Office on Windows RT and Windows Phone won't be continually updated with the latest versions.)

Microsoft did not give a release date for either Office 365 or Office 2013.

But the company did say that starting Oct. 19, purchasers of Office 2010 or Office for Mac 2011 will be able to download, when available, a year of Office 365 Home Premium service, or the equivalent Office 2013 offering, at no additional cost.

Small business customers in applicable markets will qualify for a three-month trial of Office 365 Small Business Premium.

Janet I. Tu: 206-464-2272 or jtu@seattletimes.com. On Twitter @janettu.

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