Microsoft SkyDrive LogoMicrosoft released two new versions of  Microsoft Office this year; Microsoft Office 2013 and Microsoft Office 365.

Why are there two versions, and how do they differ?

This can be a hard question to answer. The information on the official site suggests that even Microsoft is having trouble finding a reasonable explanation.

Many of the sales and FAQ sections of their site avoids giving any clear differentiation between the features available in the two suites. But, if you are considering handing over your hard earned cash, this is a question which must be answered.

According to a rather well hidden Microsoft comparison page, Office 365 has all the features of the premium Office 2013 version with a few extra online additions. The online additions include 27GB of online storage using Microsoft SkyDrive and 60 minutes of Skype calls per month.

It should be noted that Office 2013 can also be attached to a SkyDrive account. A free 7GB SkyDrive account can be integrated into Office 2013 offering the same functionality as Office 365. Yes, this does provide 20GB less space, but 7GB is still a lot of storage for Office documents.

So both versions allow the user to access documents through SkyDrive.com. SkyDrive also contains trimmed down versions of Word, Excel, PowerPoint and OneNote which can be run in-browser.

One of the primary differences is that a single Office 365 license can be used on up to 5 different computers and is more mobile. It can be used by different users on each computer at the same time.

As a could based service, it can even be accessed on computers that the user doesn’t own. For example, a temporary version can quickly be downloaded and used on a friend’s computer or the PC at the library.

Office 2013 is only licensed for a single computer.

Another big difference between Office 365 and Office 2013 in how they are paid for.

Office 365 is subscription based, costing either $9.99 per month or $99.99 annually. There is also a fully featured budget version designed for students, Office University 365. It is available to eligible students at $79.99 for a 4 year licence on 2 PCs.

Office 2013 is purchased outright for a single fee. Prices start at $139.99 for the Home & Student bundle, and tops out at $399.99 for the Professional edition.

Because Office 365 is subscription based, the program is continually updated to the latest version.

Office 2013 does not include free updates to later versions.

With no large upfront fee, the same offline functionality, free updates, multiple installs, and more online content; Office 365 does appear to be better value. But what does this mean for the future? Will the next Office be subscription only? What about the next Windows?

Are you put off by the idea of a subscription based Office – or are you excited about the lower up front cost of a subscription?

We’d love to hear your thoughts below!