Microsoft finally launched the consumer versions of Office 365 and Office 2013 this week. But, you ask, is it really worth the cost? In many cases, the answer is — surprisingly — yes.

The way most of us have used Microsoft Office over the years has stayed the same, but the software suite is changing radically, with a hard emphasis on getting consumers to subscribe. Trying to adapt to increasingly mobile consumers, Microsoft wants you to have Office everywhere you go and wants you connected to the cloud.

Microsoft’s answer to this problem is Office 365, which is a subscription version of the new Office 2013 software. Office 365 gives you subscription access to the software, and you can use it from a number of devices (up to five devices for the one-year, $100 consumer subscription; or two devices for the four-year, $80 student edition — see details below). It adds a couple of cloud-based and instant-messaging features. But otherwise, its components are the same as those of Office 2013, which is a more traditional software package ($140 and up for a permanent license that you can install on a single PC).

I’ve tested Office 2013 and the new Office 365 on a Windows 8 tablet and a Windows 7 PC, and it’s a clear evolution of the software. It addresses mobility, the multidevice lifestyle many professionals live, and connections to the cloud much better than the 2010 version of Office and the previous Office 365.

Still, you ask, why the hell should I subscribe to something when I can just pay once and be done with it? Bear with us for a minute as I explain.

Pricing and programs

First up, let’s talk about the cost and what programs you actually get with each Office option that’s being offered as of this week.

Here’s the breakdown of what you can get:

• Office 365 Home Premium: $99 per year — five devices — Word, Excel, PowerPoint, OneNote, Outlook, Publisher, Access
• Office 365 University: $80 for 4 years — two devices — Word, Excel, PowerPoint, OneNote, Outlook, Publisher, Access
• Office 2013 Home & Student: $140 — one device — Word, Excel, PowerPoint, OneNote
• Office 2013 Home & Business: $220 — one device — Word, Excel, PowerPoint, OneNote, Outlook
• Office 2013 Pro: — $400 — one device — Word, Excel, PowerPoint, Outlook, OneNote, Publisher, Access

With that out of the way, I can dig into why you might be better off by subscribing to 365 rather than buying a single copy of Office 2013.

New features in Office 2013

Since Office 365 is essentially subscribing for access to all of Office 2013′s programs and some bonuses, let’s talk about what’s new in 2013.

First, the suite’s polish emphasizes clean design, large fonts, and thinking of what you need before you need it. The ribbon interface first introduced in Office 2007 is still around, but it now has larger text and a way to easily minimize the ribbon if you want it hidden.

Handy features in here firmly enhance the experiences of each app. One feature that helps you through each app is a new start screen that pops up when you start Word, Excel, PowerPoint, and other suite programs that shows popular template options. One feature that helps in PowerPoint is the new Presenter View, which previews slides and other info on your PC’s screen while giving a presentation. In Excel, an awesome feature called Flash Fill auto-predicts the info you’re typing in cells. And in Outlook, Peeks lets you hover to view your calendar without actually leaving the inbox.

Office 2013 is also designed to better work with touchscreens, and some elements are larger to account for tapping instead of clicking. However, between touchscreen use and using a traditional mouse-and-keyboard, I would much rather control it the traditional way. Maybe my fingers are too large, but it was often frustrating to tap the right options I wanted. Microsoft needs to work with some talented interface designers to make a completely touch-focused of this software.

Office Apps are another new aspect of Office 2013. You can install these apps to add new functionality and third-party interaction to Word, Excel, PowerPoint, or more. Take a look at some of the apps you can install below.

Reasons to subscribe to Office 365 Home Premium

Here are several reasons why I think Office 365 is a good deal for $100 a year:

Multiple devices: It works on five devices, including PCs running Windows 7 and 8 and Macs running OS X 10.5.8 or later. For those of you, like me, who have multiple devices and don’t want to buy a copy for each, this is a great solution. Imagine if you have a desktop and laptop and need Outlook. Two copies of Office 2013 Home & Business will cost you $440 up front. I’d much rather pay $100 a year in that circumstance.

Office on Demand: Office on Demand is a feature that enables you to use Office on a Windows 7 or 8 PC that is not one of your five installs. For example, if you are at a friend’s house or a satellite office, you still have access to Office. Once you sign in to your Microsoft account on Office.com, Microsoft streams a copy of Office from the cloud down to that computer and you can save your work to the cloud. When you are finished with your Office on Demand session, the copy disappears and removes all traces you were there.

Cloud connectivity: Office 365 is super-connected to the cloud. When you save a document in Word or Excel, it saves simultaneously to SkyDrive and to the computer’s hard drive. That way, no matter where you access a document, you have the latest version of it on hand. Office 365 subscribers also get 60 free Skype minutes per month and a boost in SkyDrive storage from 7GB to 20GB.

Updates: While a standard copy of Office 2013 will get security updates, the software in Office 365 will continually be updated with many more features.

Students get a killer deal: Office 365 University is a fantastic value for students at $80 for four years. You only get two device installs, but Office on Demand means you can use it on many other PCs. (Like the university computer lab.) Microsoft says it will let students renew the deal a single time, which helps if they need extra time to get their degree or go to grad school.

Using Office 365

In several days of using Office 365, I’ve rather come to like it, although I experienced a few hang-ups. Installation was not hard and only took a few minutes on my Windows 7 desktop PC over a wired connection. While it was still finishing the installation of the programs, Office immediately let me use the majority of those programs if I was seriously impatient.

Using Word, Excel, PowerPoint, and the other programs was reminiscent of using older versions with thoughtful additions. As noted above, the new features in Office 2013 are handy, and after using certain tools, it would be hard to go back. After using Form Fill in Excel, I can’t imagine ever trying to do serious spreadsheet work in something other than Excel. I don’t use spreadsheets often, but I’m sure those that do will love Excel 2013. If you’re a someone who gives a lot of presentations as part of your job, you’ll likely get a kick out of PowerPoint 2013 because it offers more features and the Presenter View is smart.

I tested Office on Demand on a Samsung ATIV PC running Windows 8. It actually didn’t work as well as I wanted because my wireless Internet connection often wasn’t fast enough to download and stream the programs. After waiting for several minutes for Word on Demand to open up, it finally started letting me write a document. While I was writing the doc, it would sometimes become unresponsive while it was loading data. When I had a strong Internet conneciton, the service was more responsive and was easier to use.

Overall, Office 365 works smoothly and mostly as advertised. Once small businesses can get in on the action (more on that in a bit), it could be a compelling option for them if they aren’t already aboard the Google Apps train.

Reasons to skip Office 365

While we think Office 365 is generally a good deal for those who need powerful productivity software, I have some good reasons for you to skip it.

First, if your needs for productivity software are extremely simple, you have no reason to invest this much money in Office. You can easily use Google Docs or OpenOffice for free and get basic document, spreadsheet, and presentation editing. But if you want the most features and versatility, Office programs like Excel and PowerPoint are much more powerful.

Second, being tied to a subscription service could make some folks nervous. What if your subscription expires? Will your data and programs disappear? As ZDNet’s Mary Jo Foley points out, Microsoft will notify you that your subscription has not been renewed and will permit the download of any documents in the cloud to your hard drive. The Office programs themselves will enter a “read-only reduced functionality mode,” so you won’t be able to fully use them like you once did until your renew.

Another reason to skip? You truly only need a single copy of Office and don’t want to be on the hook for subscription costs. Let’s say you have just one home PC and you only need Word, Excel, PowerPoint, and OneNote for your productivity needs. It would be better to purchase a single copy of Office 2013 Home & Student for $140, and you’ll have it for life.

Finally, if you already have a copy of Office 2010, you probably don’t need to jump on the Office 365 bandwagon just yet. However, give it a few more years and you might want to get in. Those who have Office 2007 or before actually should consider the upgrade since there have been so many improvements since that release.

What’s next on the Office front

Microsoft plans to announce pricing and details for Office 365 for small businesses on Feb. 27. The company hasn’t explained how it will differ from Office 365 Home Premium yet, but we suspect it will offer various group editing and collaboration features in the cloud.

We also expect Microsoft is hard at work on full-fledged touch-based applications for iOS, Android, and Windows 8/RT platforms. Microsoft has routinely denied that native iOS and Android apps for Office are coming, but leaks and rumors suggest otherwise. We will see.

Wrap-up

Office 365 is the right move for Microsoft and shows a willingness to give a lot in order to attract subscribers. For $99 a year, you get access a constantly updated version of Office that accounts for having multiple computers and the chance you’ll need to use Office on a PC that isn’t yours. We think a lot of consumers and business folks will dig it.

Check out more images of Office 365 and Office 2013 below:

After teasing its launch for many months, Microsoft has finally released several consumer-focused versions of Office 365 and Office 2013 to 162 markets.

After Windows, Office is arguably Microsoft’s most important product and helps the company make a lot of cash. Office programs such as Word, Excel, PowerPoint, and Outlook are staples around the world for productivity, and while compelling alternatives do exist, these apps are still the standard for how we get work done.

But times have changed since Office debuted in 1990, and Microsoft is trying to adapt to how we work now. We’re much more mobile, we have more devices, and we’re more likely to subscribe to software at a reasonable price than pay a ton upfront. (Adobe has noticed these trends too.)

So Microsoft is offering different plans for the newest version of Office and trying to coax consumers and students with a relatively decent subscription deal. Or you can get into Office “the old way” and buy a single copy for a single PC.

Here are the details on how Microsoft is now offering up Office 365 and Office 2013.

Office 365

Office 365 Home Premium — $99/year — 5 devices

Programs: Word, Excel, PowerPoint, OneNote, Outlook, Publisher, Access

Microsoft is prioritizing Office 365 Home Premium as its top offering for consumers. With it, you can install a copy of the software on five different devices, including PCs and Macs. The software ties itself to one Microsoft account and lets you use that account to manage it in the cloud.

Office 365 Home Premium is cloud-connected in several ways. For example, when you save a document in Word or Excel, it saves simultaneously to SkyDrive and to the computer’s hard drive. That way, no matter where you access a document, you have the latest version of it. Office 365 subscribers also get 60 free Skype minutes per month and get a boost in SkyDrive storage from 7GB to 20GB.

Additionally, subscribing to Office 365 gets you an ingenious feature — Office on Demand. Essentially, whenever you are on a Windows 7 or 8 PC that is not one of your five installs (let’s say you’re at a friend’s house or a satellite office), you will still have access to Office. Microsoft actually streams a copy of Office from the cloud down to that computer and you can save your work to the cloud. When you are finished with your Office on Demand session, the copy disappears and removes all traces you were there. (We wish this worked on Macs too, but hey, can’t win ‘em all.)

“We want to drive the most demand for this,” Jevon Fark, senior marketing manager at Microsoft told VentureBeat. “This is easily the most ambitious version we’ve ever offered in the 25-year history of Office.”

Office 365 University — $80 for 4 years — 2 devices

Programs: Word, Excel, PowerPoint, OneNote, Outlook, Publisher, Access

The company will also offer a version of Office 365 aimed squarely at college students. It is basically the same offering as Office 365 Home Premium, but it comes at a better overall price and only lets you install the software twice. You’ll also get the convenience of Office on Demand, which could come seriously in handy in university computer labs, which may not have the latest version of Office installed.

Frankly, Office 365 University looks like a killer deal. Microsoft says it will let students re-up on the $80-for-four-years offer a single time, which helps if they need extra time to get their Bachelor’s degree or go to grad school.

Office 2013

If you’d rather pay a large amount upfront and not have to subscribe to get your software, Microsoft also is offering Office 2013 Home Premium in three other versions. Think of these versions as a more traditional approach to Office. If you just want a single copy that can only be installed on one PC, this is your software.

Keep in mind, Office 2013 is not as cloud-connected as Office 365. You don’t get Office on Demand and your documents don’t save simultaneously to SkyDrive and your hard drive. You can, however, save your documents just to SkyDrive if you want.

Office 2013 Home & Student — $140

Programs: Word, Excel, PowerPoint, OneNote

Office 2013 Home & Student will be the overall least expensive offering in the new Office family because you get the most basic Office programs and simply pay $140 for the life of the product. It offers the bare bones package though.

Office 2013 Home & Business — $220

Programs: Word, Excel, PowerPoint, OneNote, Outlook

Small businesses that want to approach Office from a more traditional perspective of buying a licence or two for those who need a new copy might want this version. Office 2013 Home & Business is targeted at smaller companies rather than medium-sized companies and enterprises.

Office 2013 Pro — $400

Programs: Word, Excel, PowerPoint, Outlook, OneNote, Publisher, Access

If you’re a serious Office aficionado and need the full suite of Microsoft tools, Pro is your version. Unless, of course, you’d rather have the same programs and get extra goodies by subscribing to Office 365. Chew on this: Pro costs $400 and only lets you install on one device, while 365 Home Premium lets you install on five devices with more cloud features. If you use Office 2013 Pro for four years, only then do you make up your investment when you could have paid the same for four years of Office 365.

Interestingly enough, Microsoft isn’t shy to admit that paying $400 for Pro isn’t a good deal. “My understanding is that we don’t want people to buy Pro for $400 — we want people to subscribe to 365,” Fark told us.

How it runs

The final copy of Office 365 Home Premium runs quite similar to what we saw previously when testing Office 2013. This is the Office you’ve known (and maybe liked) for years, but it has a more compelling design and more features. One feature that really stuck out was PowerPoint’s new Presenter View, which lets you preview slides and other info on your PC’s screen while giving a presentation. (You can partially see Presenter View in the top photo.) Another feature is a new start screen that pops up when you start Word, Excel, PowerPoint, and more that shows popular template options.

What makes the latest version of Office a bit different besides the cloud-connected features is that it’s also built with touch in mind. Microsoft wants you to use this software on its Windows 8 tablets like Surface as well as Windows 7 and 8 PCs. You can change the settings that optimize icons and options for touch. But exclusively using touch can be a recipe for frustration — I found it challenging to input lots of numbers or prepare a presentation. I’d much rather use these programs with a mouse and keyboard.

More business support coming

Next up, Microsoft will launch the latest version of Office 365 for businesses on Feb. 27. The company hasn’t divulged details on how it will differ from Office 365 Home Premium yet, but we suspect it will offer various group editing and collaboration features in the cloud. When we find out, we’ll let you know.

Check out more views of the new Office 365 and Office 2013 in the slides below.

Cloud-based software suite Microsoft Office 365 on Wednesday suffered its first major outage since its introduction in late June.

“At approximately 11:30am PDT, Microsoft became aware of a networking issue affecting customers of some Microsoft services hosted out of one of our North American data centers,” said Steven Gerri, General Manager for Global Foundation Services, in a statement. “We worked to isolate the issue and we are beginning to see service restoration. We continue to investigate the root cause of this issue.”

Microsoft additionally confirmed the outage via its @MSCloudUS Twitter account:

“We apologize for the inconvenience that the #office365 outage has caused today,” the account wrote. “We’re [sic] are working on resolving the issue.”

Office 365 is Microsoft’s first major play into the cloud office software scene and it is trying to establish itself as a better option than Google Apps, so outages during work hours are definitely not a good thing. In my hands on review of Office 365, I praised the service for its depth of features and its accessibility for startups and small businesses. The service promises 99.9 percent up time, so hopefully the issue does not happen again soon.

Are you an Office 365 user? If you are considering the service, does this outage deter you?

Update: As of 4:38 p.m. PDT, Microsoft said all systems were back up, meaning the outage occurred approximately five hours.

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Microsoft’s online office suite, Office 365, finally hit the streets Tuesday. But it’s about five or six years too late to the cloud-based office software game and unlikely to provide much benefit to smaller and mid-sized companies, according to a number of executives of large enterprise software providers.

Microsoft has the edge in familiarity because many of the world’s largest companies already use its Office suite of productivity software. But while that may offer Microsoft a foothold in Fortune 500 companies, it doesn’t help it win over smaller companies that might become tomorrow’s Fortune 500 companies.

“You have to aim down-market when you develop new software,” said Kendall Collins, chief marketing officer at Salesforce.com, a pioneer in cloud-based enterprise software. “Only the smaller companies have the agility to employ new software, and larger enterprises all want to pick up the software that’s popular with smaller companies.”

Larger companies are more comfortable with software that has been around for a long time, Collins said. It’s easier to get a huge company with 20,000 employees to spend $10 million on an Office productivity suite rather than experiment on newer pieces of enterprise software like online collaboration software Yammer, he said.

“Microsoft has relied on CIOs that can spend a $100 million IT budget without thinking,” Collins said. “The Internet has changed distribution and individuals just buy software that makes sense to them.”

But most startups and smaller enterprises employ a host of smaller enterprise software providers, like Box.net and Yammer, rather than a single productivity suite like Office. Those services are designed with the end-user experience in mind and are much more user-friendly, adopting lessons learned from social networking companies like Facebook and Twitter. Services like Box.net and Yammer are also typically much cheaper than deploying large office suites like Office 365 and offer their users many more options.

Salesforce.com markets its products toward the entire spectrum of enterprises, Collins said. But when the company is designing new elements for its software, such as its online collaboration software Chatter, it develops it with smaller enterprises in mind. That’s because many smaller enterprises today are employing workers just out of college that will move on to become the next wave of office workers, he said.

“There’s a lot of people coming out of college and universities and they walk into companies, and it’s like a computer science museum of crap they need to work with,” Collins said. “They’ll say, this is just not the way that I work with people, and they’ll feel lost.”

Office 365 isn’t going to win the hearts and minds of the next generation of office workers, said Scott Weiss, an investor with VC firm Andreessen-Horowitz who focuses on enterprise software. Office 365 will mostly feature incremental improvements, but it won’t have the kind of breakthrough features like Google Apps brought to market when it launched, he said. And that isn’t because Microsoft is late to the cloud game — it’s because massive suites like Office just aren’t sustainable any more, he said.

“If Office was awesome and perfect, the fact that it’s delivered in a browser wouldn’t even matter,” said VMWare chief technology officer of cloud apps Javier Soltero. “The fact is that office suites like this have just run out of gas.”

Office 365 should be relatively successful because Microsoft has a huge reseller network that it has to plow through before it’s able to bring a new product to the market. That’s a large part of the reason why Microsoft has been so successful in selling new versions of its Office software. There’s a large food chain that benefits from reselling and integrating applications with Microsoft’s Office software, Soltero said.

That’s also the reason why it took Microsoft more than five years to finally release a cloud-based office suite. The whole suite has to serve as an anchor for its other business software rather than an innovative new class of software, said Aaron Levie, CEO of cloud storage provider Box.net.

If there’s anything good to come out of Microsoft’s cloud announcement, it’s that the whole notion of cloud computing will become more widely accepted, Levie said. Cloud computing has only been widely accepted by enterprises and tech-savvy individuals and hasn’t yet hit mainstream audiences, he said. Microsoft’s announcement today — coupled with Apple’s iCloud announcement — should make the technology more visible to typical consumers and other businesses that haven’t employed cloud computing technology.

“Microsoft and Apple out there using the ‘cloud’ term is just making the market bigger,” Collins said. “And it’s making the market bigger for something that Microsoft isn’t good at. And the second that Apple used the word iCloud, that was seminal moment in the industry.”

“Everyone in the consumer world hasn’t yet used this cloud term — your girlfriend, your kids, your grandmother — but that term is now out there in a totally different world and it’s forcing people to rejigger how they think about stuff.”