Office 365 vs. Office 2013: What are the key differences?

Software as a service may be one reason for choosing Office 365 over Office 2013, but licensing and update frequency are other considerations.

Few business productivity suites provide the utility and flexibility found in Microsoft Office. But the traditional "fixed installation" model of application deployment is being challenged by alternative models, such as Microsoft's Office 365.

Software as a service (SaaS) enables enterprises to affordably provide applications to a larger number of users. It also supports supplemental features that would simply be impossible with offline software.

Although a comparison of Office 365 vs. Office 2013 shows the same essential tools, such as Word, Excel, PowerPoint and others, it's important to understand the major differences between them and to select the approach that's best for your organization.

Ownership models

An examination of Office 365 vs. Office 2013 reveals different ownership models. The biggest difference between Office 2013 and Office 365 is the way in which the software is acquired. For example, Office 2013 uses a traditional license model, where the software is purchased once and installed once. A perpetual license ensures that the buyer can continue to use the suite forever (though updates and technical support may eventually cease).

The standard edition of Office 2013 is listed for $369, and the Professional Plus edition is listed for $499 per license.

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By comparison, Office 365 is the same basic product provided as a subscription-based online service billed on a monthly or yearly basis. Users can continue to access Office 365 as long as the subscription is current. Office 365 for a midsize business is listed for $15 per month, and the Enterprise E3 and Government editions are listed for $20 per month (E4 is listed for $22 per month).

The SaaS model can be particularly attractive for transient or fluctuating user counts, especially in the short term.

Endpoints covered 

Office 2013 covers fewer endpoints per license. The big draw for SaaS is the notion of accessing documents, spreadsheets, presentations and other content from any system, anywhere. With a traditional purchase, the business edition of Office 2013 provides one license for one computer. You can certainly uninstall Office 2013 and transfer the installation (and license) to another computer, but anyone who has installed Office knows that the process is time-consuming.

By comparison, Office 365 Midsize Business and Enterprise E3/E4 editions provide five licenses per subscription, allowing access to a full version of Office 2013 on up to five computers. For example, users can access Office from their office PC, from a laptop on the road or while working from home -- all for the same monthly E3/E4 license.

Supplemental services

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Office 365 provides supplemental services. In contrast, enabling multiple installations of Office 2013 is only one roadblock to mobility, but it can be difficult to ensure access to the content created with Office tools across multiple PCs. Network storage or mobile storage devices (such as flash drives) can help, but version control and collaborative content work can be a challenge.

Since Office 365 is based on the cloud, Microsoft also offers 1 TB of online storage for each user with OneDrive for Business. This allows file access from any installation, as well as file sharing among authorized users. If Office must be used offline, the OneDrive application can maintain a synchronized version of OneDrive storage on each licensed endpoint.

Constant upgrades

There are also significant differences between maintenance and upgrade models for SaaS products versus traditional application suites. For example, purchasing Office 2013 entitles users to patches and updates as bugs are fixed and behaviors are tweaked, but the product will always be Office 2013, regardless of how long you own it. Eventually, even the patches will stop as the product reaches the end of its support life.

A SaaS product, such as Office 365, by contrast, receives perpetual maintenance and upgrades. It will receive the same fixes and feature updates as traditional software, but when it's time to release a new version of Office, Office 365 will upgrade to future versions -- it's part of the monthly subscription fee.


Office 365 emphasizes collaboration. OneDrive storage and file sharing allow for real-time document sharing for dynamic authoring. It also provides versioning control to ensure that only the latest version is used. But this is only one aspect of collaboration.

Office 365 includes several other collaboration tools, including 60 Skype audio minutes per month, access to high-definition video/audio conferencing, screen sharing and instant messaging. Enterprise social networking is provided with Yammer Enterprise. The combination of shared documents and real-time collaboration tools promises high levels of creativity from any authorized PC or tablet.

The choice between traditional software suites, such as Office 2013, and SaaS offerings, like Office 365, comes down to much more than price.

The choice between traditional software suites, such as Office 2013, and SaaS offerings, like Office 365, comes down to much more than price. Both deployment models provide the same essential Office tools, but there are substantial differences worth considering carefully.

Potential adopters must consider the number of systems served by each license (how many systems on which the software can operate), how long the business plans to use traditional software before upgrading and the business value of supplemental features like OneDrive and Yammer.

Admins should also assess the effects of SaaS operating expenses on business budgets, as well as the difficulty involved with integrating Active Directory and email with their current IT environments.

Next Steps

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Compare Microsoft's pricing for Office 365 and Office 2013

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Some non-Windows devices need Office 2013 licensing

Microsoft must convince customers that Office 365 ProPlus is worth a subscription

Why the Office 2013 suite still beats the competition

Beware of gotchas before installing Office 2013

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