Microsoft Is Winning People Over With Its $US99-Per-Year Version Of Office

Microsoft surface 2 running microsoft office and wordSteve Kovach/Business InsiderMicrosoft Surface with Office

Microsoft’s annual subscription version of Office, called Office 365 Home Premium, has been steadily growing.

Home Premium launched a year ago and now has 3.5 million subscribers, Microsoft said during its quarterly financial earnings report.

That’s up from the 2 million subscribers it reported in October 2013. And that’s up from the 1 million subscribers it had in May 2013, a few months after it launched.

Back in May 2013, Microsoft declared Home Premium the “Best Selling” version of Office ever.

The product was a pretty big question mark when Microsoft launched it a year ago because it asks users to continuously pay for it: $99 on an annual basis, or $US10/a month. It’s basically the same product as Office Home & Student 2013, which has a one-time price tag of $US140.

But with Home Premium, you can install it on up to five computers (Windows 7, Windows 8, or Mac) and updates and new features are included. The price makes sense for families who buy Office for several home computers. The other version, 2013, can only be installed on one computer, same as always.

The true test for Microsoft will be getting those customers to renew. The first crop of users, who bought the product in January, are being asked to renew now. If they don’t, they don’t lose access to their files, but they can’t edit them with Office anymore.

We’ll have to wait and see how Microsoft reports on Home Premium renewals next quarter.

In the meantime, the growth in Home Premium has impacted Microsoft’s overall consumer Office revenue. That was down by 24%, Microsoft said. The company attributed 16% of that decline to people buying Home Premium instead.

All of these versions of Office also face competition from Microsoft’s Surface 2 tablets which includes a free version of Office, pre-installed.

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