What are the differences between Office 2016 and Office 365?

Microsoft Office may be the de facto productivity tool for millions of workers worldwide, but it’s no monolith. Rather than a single, towering smooth-black Office, there’s a whole Stonehenge of options: Office on the iPhone, on iPad, Office on Android smartphones, Office on personal computers, Windows and macOS, Office with a handful of applications, Office with fistfuls’.

But when you get down to it, there are really only two kinds of Office. One, which most label Office 2016, is the stand-alone suite that traces its roots back to the last century. The other, Office 365, is the subscription service that debuted in 2011.

How they differ can be confusing, especially since both include, more or less, the same applications. Here are three top ways to tell these tools apart.

How they’re paid for

Of the differences between Office 2016 and Office 365, purchase plans are among the most striking.

Office 2016, whether bought one copy at a time in retail or in lots of hundreds via volume licensing, has been dubbed a “one-time purchase” by Microsoft to spell out how it’s paid for. (Labels like “perpetual,” which has been widely used by Computerworld, technically note the type of license rather than payment methodology, but in Office’s case, the kind of license is tied to whether it was bought outright or simply “rented.”)

Microsoft defines the term as when “…you pay a single, up-front cost to get Office applications for one computer.” Up-front is the key adjective there; Office 2016’s entire purchase price must be laid out before receiving the software.

That purchase, actually of a license to legally run the software, gives the buyer the right to use Office 2016 in perpetuity. In other words, the license has no expiration date, and users may run the suite as long as they want. Pay for Office 2016 this year and use it for the next eight years? Fine. Run it until 2030? Nothing to stop you.

One-time purchases include Office Professional Plus 2016 (Windows) and Office Standard 2016 for Mac (macOS), the enterprise-grade SKUs available only via volume licensing; and retail packages such as Office Professional 2016 (Windows) and Office Home and Business 2016 for Mac (macOS).

Office 365, the purchase method Microsoft’s now pushing most aggressively, is a subscription service, so payments are made monthly or annually. The latter may produce savings in exchange for the commitment: Office 365 Business Premium, for instance, costs $12.50 per month per user when paid in an annual lump sum ($150 per user), but $15 per month per user on a month-to-month plan ($180).

All enterprise plans — from E1 to E5, as well as ProPlus — do not offer a monthly option, but require an annual commitment.

Like any subscription, Office 365 provides a service — in the case of Office, it’s the right to run the suite’s applications — only as long as payments continue. Stop paying, and rights to run the apps expire. (Actually, they don’t immediately stop working; the applications will continue to operate normally for 30 days past the previous payment’s due date.)

A license for Office, then, is contingent on sustained payments. Halt the latter and the license is revoked. Restarting the payments restores the license.

Office 365 plans range from one for individual consumers (Office 365 Personal) and small businesses (Office 365 Business) to educational institutions (Office 365 Education E5) and corporations (Office 365 Enterprise E3).

How they’re serviced

Although payments define one difference between Office 2016 and Office 365, Microsoft’s turn to a faster development and release pace is ultimately more important to users — and the IT professionals who support them.

Think of Office 2016 as traditional software made and sold in traditional ways. That holds for servicing, too. Microsoft provides monthly security updates for Office applications, usually on the second Tuesday of each month, and also fixes non-security bugs for the first five years of the SKU’s lifecycle.

But Office 2016 does not receive upgrades with new features and functionality. What you get when you buy the suite, feature-wise, is it. When Microsoft produces a new edition, which it will eventually do (and call it Office 2019 or Office 2020, for example), you will need to pay another up-front fee to run that.

Office 365, on the other hand, has a completely different servicing model. While the Office applications licensed to users through Office 365 receive the same security patches (and non-security fixes) distributed to Office 2016, they also acquire new features and functionality on a twice-a-year schedule. Three months ago, Microsoft revamped the update calendar, saying it would issue upgrades in September and March of each year. The first is to start rolling out Sept. 12. This support document lists the upgrade release dates through September 2018.

As new features and functionality accrete, the applications evolve until, at some point, Microsoft says they are sufficiently different to warrant a new numerical moniker, such as Office 2019 or Office 2020. It will then package those versions into an upgraded suite for customers who continue to make one-time, up-front purchases. (Microsoft has pledged to offer a successor to Office 2016, but has not committed to non-subscription forms beyond that.)

How they hook up with cloud services

Neither Office 2016 or Office 365 is truly cloud-based, but both are able to connect with Microsoft’s cloud services (and to a very limited extent, some third-party services). Currently, both the applications awarded in a one-time purchase of Office 2016 and those installed as part of an Office 365 subscription can connect with services such as Microsoft-hosted Exchange, OneDrive storage and Skype for Business.

However, in April Microsoft announced a major change in the rights of Office 2016‘s successors to do just. After Oct. 13, 2020, Office applications acquired through an up-front purchase of the suite must be in their “Mainstream” support period, which is the first five years of the traditional guaranteed 10, to connect with Microsoft’s cloud services.

The change takes aim at customers who mixed cloud services with traditional one-time payment software as it effectively halves the length of time the latter can be used in those organizations. At the same time, the post-2020 rule advances Microsoft’s efforts to push, aggressively so, business customers toward Office 365. And the company hasn’t been shy about saying so.

“Office 365 ProPlus is our recommended Office client for Office 365 users,” said Alistair Speirs, a senior operations program manager, in an April post to a blog. “This is the Office client that stays up to date with frequent feature releases and ensures the best service experience.”

Applications obtained from an Office 365 subscription will never have a connect cutoff date.