Microsoft says its boxed software probably will be gone within a decade

Ever since Microsoft introduced Office 365 Home Premium subscriptions in January, we've been wondering when Microsoft might give up on packaged versions of Office.

Now it seems we have our answer.

The software giant is betting that, over the next 10 years, most people will voluntarily pay for subscriptions instead of purchasing boxed software. "We think subscription software-as-a-service is the future," Microsoft said on its official Office blog. "Within a decade, we think everyone will choose to subscribe because the benefits are undeniable."

For now, however, Microsoft says it will continue to offer packaged Office suites in addition to Office 365 subscriptions. "We think people's shift from packaged software to subscription services will take time," Microsoft said. "In the meantime, we are committed to offering choice--premier software sold as a package and powerful services sold as a subscription."

Microsoft's comments on subscription were inspired by Adobe's announcement that it was dumping Creative Suite as a software package and going all in with its Creative Cloud subscription service.

Benefits, benefits, benefits

The biggest benefit of subscription software is that it is always up to date, Microsoft says. Add-on services like extra SkyDrive storage and Skype minutes are also easily integrated into a yearly fee scheme.

Office 365 Home Premium is currently priced at $99 per year or $10 per month. That fee entitles you to the complete, and most recent, Office suite (currently Office 2013), which includes Word, Excel, PowerPoint, OneNote, Access, Publisher, and Outlook.

You also get an extra 20GB of SkyDrive storage, and 60 Skype calling minutes per month. In addition, you can install the Office suite on up to five different PCs in your home, and each installation can be personalized for individual family members.

The addition of Outlook alone is a huge difference between Office 365 Home Premium and Microsoft's typical packaged suites.

Office Home and Student 2013, for example, offers Word, Excel, PowerPoint, and OneNote for $150. To purchase Outlook in addition to those programs, you'd have to spend an extra $80 to get the $220 Office Home & business 2013. And that's just to add Outlook.

If you need to create databases with Access or use Publisher to create flyers and posters, you're going to spend as much as $400 for Office Professional 2013. Office 2010 offered similar pricing.

Cost of ownership

If you're just looking for the basics, however, then the new subscription plan for Office may not be ideal.

Assuming Microsoft stays true to form, the next major Office overhaul is due around 2016. Over the next three years, an Office 365 subscriber will pay $297 to have Office, while buying the standalone version would cost nearly half that at $149. If you're just using Word, Excel, PowerPoint, and OneNote, then spending double the price on what is essentially the same product is certainly a waste of money.

"Cost of ownership is far lower for me buying Office, rather than subscribing," said Geoff Coupe in the comments of Microsoft's blog post. "So long as that remains so, I will continue to buy."

Note that that concern remains true only if Microsoft rolls out Office as it always has in several-year increments, and there's every indication that won't be the case.

The company is trending towards a rapid release cycle for all of its products including Office. This may mean that the next major Office upgrade won't come all at once in 2016, but in gradual updates over the next three years and beyond.

Recent rumors suggest the next Office upgrade, codenamed Gemini , is due later in 2013 and may include modern UI versions for Word, PowerPoint, and Excel. OneNote is already available as a free download in the Windows Store.

So to get the latest and greatest Office updates, you would have to be in the subscriber stream or wait to get all of the new features at once in 2016.

Legacy OS, latest Office

Another potential downside to software subscriptions is the issue of legacy platforms.

Right now, you may be running Windows 7 or 8--platforms the current version of Office was designed for. But how long will you be able to run the latest-and-greatest version of Office on these systems?

Microsoft will inevitably dump Office 365 support for Windows 7 and 8 at some point. What happens if you stick with these systems instead of moving on to a newer version of Windows, in much the same was as many people currently cling to Win XP?

Do you continue paying $99 per year for an Office subscription that no long delivers new features or security updates? Maybe that standalone version of Office was the better buy after all.

Windows subscription software-as-a-service

What if Microsoft begins to offer Windows as a subscription also? The company did say the future was "subscription software-as-a-service," so why not sell Windows 365 Home Premium?

There are some rumblings about Microsoft creating a cloud-based version of Windows for enterprises, which leads to speculation about a Chrome OS-like future for Windows that you would subscribe to.

What if Microsoft isn't planning a remotely accessed Windows for consumers at all, but annual subscriptions to the desktop version? Under that scheme, you'd never have to worry about Office becoming too advanced for your OS since you'd always have the newest OS.

You may have to get new hardware to keep up with Windows every few years, but not as often as you'd think considering Windows system requirements are pretty close for Windows 7 and Windows 8. Microsoft already offers Windows software subscriptions to IT professionals via its TechNet service, so why not create a consumer equivalent?

There are of course, several problems with turning Windows into a subscription service.

Look at how PC sales are already plummeting. Continuous Windows upgrades would give consumers yet another reason to hold onto their current PC, which is a move that could spook computer makers.

Before it's time for companies like Acer and Samsung to freak out, however, you'd have to convince people to pay for Windows every year. That's a tough sell when most people have never directly paid for Windows at all and consider it just part of the cost of buying a new PC.

Windows subscriptions would be a tougher sell compared to Office, but there's a chance they could be the future.