Microsoft Office: Buy or subscribe? / by kevin murray

Microsoft Office is pretty much ubiquitous in offices and homes all over America, and is the de facto standard for word processing, Excel, and other features of Microsoft Office.  Microsoft is one of the most profitable enterprises ever created, especially profitable, because a lot of what they sell is software as compared to hardware in any of its many forms.  In fiscal year 2015, Microsoft did 93.5 billion dollars in Revenue, and had a staggering 60.5 billion dollar Gross Margin, with an Operating Income of 18.1 billion dollars. When a company of the size, profitability, and market share that Microsoft represents, makes a conscious decision to take their flagship product and begin offering it for rent, lease, or subscription, believe this statement: that they are making this transition to increase their revenue and to increase their gross margin despite how they dress it up as a service or as a consideration for their massive consumer base.

 

The fact of the matter is to own software means exactly what it implies to mean, which is that you have bought it, you own it, you install it, and the manufacturer of it, will maintain it and support it for a reasonable period of time.  On the other hand, if you subscribe or rent software, you won't own it, although you will be entitled to all of its bells and whistles, all of its improvements, all of its support, all of its many future features, until such a time as your subscription lapses, in which case, you won't be able to utilize it at all or if so, under vastly reduced functionality.  This means that one way of dealing with software is to buy it, know exactly what your cost will be and be done with it, whereas the other method is to lease it, and keep paying and paying and paying.

 

Of course, Microsoft likes to argue that by purchasing their software outright, that you will over a period of time, have software that as it becomes outdated, will mean that you thereby won't be entitled to having the newest, sweetest, and cutest features of Microsoft Office and other assorted accouterments, but in actuality, most users hardly use all of the many features to their maximum effect in the first place, so they aren't sacrificing much, if anything, and they most certainly will be saving themselves money if they plan to keep the software for any reasonable length of time, especially, if their license agreement, clearly provides them with the option of transferring their software to a new machine.  

 

There may be valid reasons why a given consumer might want to subscribe to Microsoft Office as opposed to buying the product, but, not too surprisingly, Microsoft knows it isn't going to be able to convince a significant amount of people of those reasons all at once, so it has made it their policy to preinstall Microsoft Office365  on new computers, to which, as this is their subscription product, and not their buy-alone product, the hope is that by easing consumers into the direction of leasing the Office product, or defaulting into a lease, they will increase the consumer percentage of leases of Microsoft Office, and thereby make even more money on a product line that has already accumulated a staggering lifetime of profitability, on the backs of everyday loyal consumers.