Geek Vs Geek: Is Microsoft’s New Office 365 Personal Too Little, Too Late?

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We’ve lived with Microsoft’s new annual subscription version of Office for a year now, and opinions are still mixed from pundits and customers alike (this time last year, Dave and Rick argued about the virtues of paying a subscription versus buying Office outright). Now Microsoft has announced that there’s soon to be a less expensive, less powerful version of Office 365 — it still requires an annual subscription, but Microsoft hopes to woo people unwilling to pay $100/year. Dave and Rick weigh in on this new plan.

Once a month, eHow Tech editor Dave Johnson faces off against Rick Broida, who writes about technology for CNET, PC World, and Wired. Follow along as they tackle this question from opposing corners.

Dave: The big news this week from Redmond is that Microsoft has introduced a new, lighter version of Office. Office 365 Personal comes with access to all the usual programs — Word, PowerPoint, Excel, OneNote, Outlook, and even Access. You also get 20GB of additional OneDrive space and an hour of free international calling on Skype. But while Office 365 Home lets you use your Office license on 5 computers for $100/year, Personal works with just one. For $70/year.

Rick: Kudos to Microsoft for realizing some people are single. Wag-of-the-finger to Microsoft for failing at math. If I can get five licenses for $99, it stands to reason I should be able to get one for $20. Can you imagine the positive buzz if Microsoft had offered Personal for $20 per year, or even $25 or $30? But, no, the company insists on charging a premium for a suite of tools you can get elsewhere for free or cheap. Business as usual.

Dave: Yeah. Before we move on with the discussion, I just have to drill in here a bit. This is no small matter: If the going rate is 5 licenses for $100, a single license for $70 is a huge step backwards. Microsoft might have intended to lower the barrier to entry, but Office 365 Personal is a terrible, terrible value. Who in their right mind would say, “$100 is too costly, but $70 is just right”? Those prices are simply too similar. To woo reticent shoppers, the price absolutely, positively needs to be under $50. Offering Office 365 Personal for $70 is… insulting.

Rick: Agreeing with my indisputable logic once again, eh? It’s about time you recognized who’s the smarter geek around here. I guess for this outing we’ll have to rename the blog Geeks Vs. Microsoft. Because you’re right: “insulting” is exactly the word I’d use to describe Office 365, especially considering Microsoft’s laughable value-adds: 20GB of extra OneDrive storage and 60 minutes of Skype calls per month. Want to know the rate for calling, say, India via Skype? It’s 1.5 cents per minute. So that incredible generosity is worth about 90 cents. That’s like GM throwing in a stick of gum when you buy a car.

Dave: I’m still trying to wrap my head around the fact that while you’re agreeing with me — I started this conversation this month — you’re claiming that it’s me who’s agreeing with you. That, and what exactly is the whole value proposition here, as Microsoft sees it? Satya Nadella — Microsoft’s new CEO — is actually aware that his company offers the Office suite online, for free, right? Today, this very moment, you can go to Office.com and use Word, Outlook, PowerPoint, Excel, and more, in a Web browser, without spending a penny. If my choices were between that and Office 365 Personal,  I’d just use the free version and get my Skype fix by buying one fewer cupcake each year.

Rick: Not to split hairs (especially those fragile white ones of yours), but you didn’t actually start the argument — I did. Anyway, I’ve been using Kingsoft Office Free 2013 for the better part of a year, and it’s an excellent Microsoft Office clone. Oh, in case the name didn’t give it away? It’s free. You don’t get Outlook or Publisher, but I suspect programs like those aren’t the chief drivers for buying Office anyway. The fact remains that Microsoft continues to overcharge for its products — not just Office, but also Windows itself. Pricing an operating system at $129.99, in this day and age, is just ludicrous. Make it $20. Make it free. Do something that earns you some goodwill. Microsoft has always been clueless on that front.

Dave: This is where we part company. I take the road of common sense, while you are hiking the crazy trail. We’ve kind of veered off topic, but I can’t let that go unchallenged. Make Windows $20? Or free? Why on earth would Microsoft do that? You can’t pay employees with goodwill. Every business needs to price its products so that it can recover all of its costs and make a profit. You also need to capture enough revenue to support, evolve, and upgrade your product through research and development. Giving Windows (or Office for that matter)  away for free won’t accomplish those things. What is the lowest price Microsoft can reasonably charge for its flagship products? I don’t know, and neither do you — but asserting that they can take what used to be a $400 product and now sell it at $20, for example, or even give it away for free, demonstrates a startling lack of understanding of economics.

Rick: Wow, did you really just attempt to apply Economics 101 to the computer-software industry? Our readers are going to have a field day with you for that one — and our readers consist of my mom and your mom. Ever hear of Apple OS X? Price: $19.99. Linux: free. Android: free. iOS: free. Don’t sit there and tell me Microsoft can’t lower the price of Windows, because it’s surrounded by less-expensive alternatives. Heck, Microsoft offered Windows 8 for the promotional price of $50 before it launched, and buyers snapped it up (despite the fact that it sucked). The company is clinging to a pricing model that literally dates back almost 30 years. And the same is true for Office. You want me to subscribe to your software as a service? I’ll give you $20.

Dave: Yes, I am trying to teach you economics because you clearly don’t understand it even at a high school level. Apple can more or less give their OS away for free because their product is a closed ecosystem and they are selling you the hardware it runs on — at a healthy profit. Google doesn’t profit on the OS because they are building market share for an advertising platform — remember, the big evil G is an ad company. I suppose Microsoft could give away Windows and Office for $10 if you were willing to see ads on your desktop and in your Word documents. Want a banner ad for Go Daddy embedded in your TPS report? Want to have to watch an Old Spice video before you can use the Format Painter? I didn’t think so. I’m not saying they can’t lower prices — heck, that was my original point. Office 365 Personal is insultingly expensive compared to Office 365 Home. But give me a break, dude. They can’t give it away or price it arbitrarily low unless their business plan is to let their 20,000 employees go find work somewhere else.

Rick: So Microsoft should continue overcharging customers simply because that’s what they’ve always done and they have 20,000 employees? Yeah, that seems fair. What you fail to grasp is that everyone hates Microsoft. They hate being gouged for an operating system that sucks and an office suite that’s overkill. I probably use 10 percent of Microsoft Office’s capabilities, which is exactly why I’m now using a free substitute. Lower prices would go a long way toward restoring some goodwill, and Microsoft needs to either understand that or get trampled by Apple, Google, or some clever startup. And as you said yourself, Office Personal is proof positive that Microsoft hasn’t learned this lesson.

Who won? We’d love to hear from you. Weigh in with your opinion in the comments, or tweet @davejoh.

What other tech topics would you like to see Dave and Rick discuss? Send your ideas to Dave via Twitter @davejoh. And if you follow Dave, he promises to come to your home and explain something techy to your dad.

And hey, have a question about tech? You can talk directly to one of our nerds and get an answer right away.

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