An Office 365 Primer

About a year and a half ago, Microsoft essentially relaunched Office 365 as a set of subscription-based offerings that target both individuals (or what we might call consumers) and businesses of all sizes. But the Office 365 services that are available to individuals are quite different than the business versions, leading to some confusion. Indeed, the sheer number of Office 365 offerings is the source of much confusion as well. So let's figure it all out.

But first, let's take a quick step back. Because lingering in the background of any discussion about Microsoft platforms is this notion of a Microsoft account. Which is itself confusing.

Microsoft account 101

Note: This description has been adapted from a discussion of Microsoft account in the forthcoming Surface Pro 3 Field Guide. I know, lazy.

Your Microsoft account is an email address and associated password that you use to access Microsoft and connected online services. It's similar to the Apple ID you may use to make purchases through iTunes or the Google account you may use to sign in to Gmail or YouTube. In addition to using your Microsoft account to sign in to online services, you can also use it to sign in to your Windows 8.x PCs and devices and Windows Phone smart phones.

And chances are, you do have a Microsoft account already. Any Hotmail, Live.com, MSN, Outlook.com email address is a Microsoft account. If you previously created an Xbox Live Gamertag, you have a Microsoft account. Ditto for users of the now-defunct Zune services, which have evolved into the Xbox Music and Xbox Video services.

On that note, you may even have multiple Microsoft accounts. And that's fine, except that you should consider choosing one to use as your primary Microsoft account, the one you'll use to sign in to your Windows PCs and devices, Windows Phone handsets, and Xbox One video game console. But that's a discussion for another day.

For now, consider that while a Microsoft account can be a Hotmail-type account—like *@hotmail.com, *@live.com, *@outlook.com, *@msn.com and so—it can also be another account. Microsoft used to support custom domains through its now-defunct Windows Live services, so you could have previously done something like make your personal account ([email protected] or whatever) a Microsoft account. And you can still make any email address a Microsoft account. For example, if you have a Gmail or Yahoo email account, you can make that a Microsoft account too. The only difference is that you will not be able to access your email (and contacts and calendar) information through outlook.com as you can with Hotmail-type Microsoft accounts. You still need to use the originating service for that.

What you get for free with a Microsoft account

Each Microsoft account comes with various features and capabilities. Email, contacts and calendar through Outlook.com on the web and via Windows, Windows Phone and any modern mobile device, for example. (Except for those non-Hotmail-type accounts as noted above). 15 GB of free cloud storage from OneDrive. Free access to the Office Online web apps—Word, Excel, PowerPoint and OneNote Online—via Office.com. You can use Skype. Sign in to your Windows 8.x and Windows Phone 8.1-based devices and sync settings between them. Play games and access entertainment services on Xbox Live. All kinds of stuff.

There's no free version of Office 365. But the ability to access Office Online, Outlook.com and OneDrive together—and collaboratively with others—is a big deal, and a fairly amazing amount of functionality to give away. Outlook.com can obviously be access offline via PCs and devices, and if you already have a modern (2010+) version of Office installed on your PC, you can store your documents in OneDrive, and access them offline (Windows 7 and newer). Ditto for Windows Phone, which includes Office Mobile. (Office Mobile on Android or iOS, or Office for iPad require an Office 365 subscription of some kind.)

So let's see what happens when you pay.

Office 365 for Individuals: Personal and Home (and University)

Microsoft offers two mainstream Office 365 subscriptions for individuals, Office 365 Personal and Office 365 Home. (Office 365 University is similar, but aimed at higher education students at a discount.) Each requires you to sign in to Office365.com with a Microsoft account, and your Office 365 subscription is associated with that account.

Aimed at individuals, Office 365 Personal costs $6.99 per month or $69.99 per year. It comes with one install of Office 2013 Professional Plus (Word, Excel, PowerPoint, OneNote, Outlook, Publisher and Access) for Windows-based PCs (and/or the latest Office for Mac version) plus one install of Office for tablets (which is just iPad right now; Android and Windows "touch" versions are on the way), plus unlimited Office Mobile usage on Android, iPhone and Windows Phone handsets. You get 1 TB of additional OneDrive storage plus 60 Skype world minutes of calling per month to 60+ countries. And you can access Office Online on the web, of course. You can find out more about Office 365 Personal here.

Aimed at families or a person with multiple PCs, Office 365 Home costs $9.99 per month or $99.99 per year. It comes with five installs of Office 2013 Professional Plus (Word, Excel, PowerPoint, OneNote, Outlook, Publisher and Access) for Windows-based PCs (and/or the latest Office for Mac version) plus five installs of Office for tablets (which is just iPad right now; Android and Windows "touch" versions are on the way), plus unlimited Office Mobile usage on Android, iPhone and Windows Phone handsets. You get 1 TB of additional OneDrive storage per user plus 60 Skype world minutes of calling per month to 60+ countries. And you can access Office Online on the web, of course. You can find out more about Office 365 Home here.

Both of these services are a tremendous value, but Office 365 Home, in particular, is pretty amazing. For just $30 more per year, you get four more installs of Office for Windows/Mac and four more installs of Office for tablets. As important, you can add users to your account and spread the wealth: Everyone in your family can get a copy of full Office, Office for tablets, Office on their smart phones, and an additional 1 TB of OneDrive storage. Seriously, that's amazing.

There are many differences between these subscriptions and the Office 365 business offerings noted below. Email, calendar and contacts management occurs through Outlook.com (unless your Microsoft account is a non-Microsoft email address, as noted). And your cloud storage is in OneDrive. On the Office 365 for business offerings, these services are provided directly through Exchange- and SharePoint Online in Office 365, and are more applicable, from management and functionality standpoints to the needs of businesses.

Office 365 for small businesses: Small Business and Small Business Premium

Microsoft offers two mainstream Office 365 subscriptions for small businesses, Office 365 Small Business and Office 365 Small Business Premium. (Office 365 University is similar, but aimed at higher education students at a discount.) While it's possible for you to use a Microsoft account to sign into these services, it's not required or expected, as your business will typically have its own domain name. (So your email address will be something like [email protected] or whatever.)

Another important distinction is that Office 365 business accounts are by nature group-based. That is, you will not typically have just a single account in a business. (Though you could, of course.) This means that you could mix and match account types. For example, you might have five users with Office 365 Small Business accounts and five (or whatever) with Office 365 Small Business Premium accounts. It's all dependent on the needs of your users. (And when you move up to the offerings for larger businesses, these user needs and the resultant Office 365 account type offerings diversify even further.)

The Office 365 small business offerings are available to businesses with 25 or fewer users only. Each is backed by a 99.99 percent ("4 nines"), financially backed uptime agreement and comes with 24/7 phone support.

Aimed at users who already have their own copy of Office (2010 or newer) or who do not need Office installed on their PCs, Office 365 Small Business costs $6.00 per user per month or $60.00 per user per year. It provides access to Exchange Online-based email, contacts, shared calendars and tasks, SharePoint Online-based document storage and collaboration with 1 TB of OneDrive for Business space per user, Lync Online-based communications, online meetings and HD video conferencing capabilities, Office Online access on the web, Office Mobile usage on Android, iPhone and Windows Phone handsets. You can find out more about Office 365 Small Business here.

Aimed at users who need Microsoft Office, Office 365 Small Business Premium costs $15.00 per month or $150 per year. It includes everything listed above in the Office 365 Small Business description and adds five installs of Office 2013 Professional Plus (Word, Excel, PowerPoint, OneNote, Outlook, Publisher and Access) for Windows-based PCs (and/or the latest Office for Mac version) plus five installs of Office for tablets (which is just iPad right now; Android and Windows "touch" versions are on the way). You can find out more about Office 365 Small Business Premium here.

Compared to the consumer offerings (Office 365 Personal and Home), Office 365 Small Business and Small Business Premium utilize Exchange Online, SharePoint Online and Lync Online-based services instead of OneNote, OneDrive and Skype (respectively). Cloud storage is through OneDrive for Business, which is part of SharePoint Online, and not OneDrive, which while similar from a functional perspective, is in fact based on different technologies.

But one sort of subtle difference I'd really like to highlight here is that none of the users of Office 365 Small Business or Small Business Premium are Microsoft accounts by default. Yes, you could in fact make any of these accounts a Microsoft account, but doing so is not necessarily advisable. The important point is that these accounts are not Microsoft accounts by default. They're work accounts. Office 365 for business accounts.

Office 365 for larger businesses

I don't want to spend too much time on the selection of Office 365 subscriptions that are available for larger businesses. But there are a lot of them, which differ wildly in both capabilities and price.

Office 365 for Midsize Business costs $180 per year per user and applies to businesses with 300 or fewer employees. It's analogous to Office 365 Small Business Premium from users' perspectives but adds Active Directory integration with onsite infrastructure, allowing your company to federate accounts between on premises servers and the cloud.

Microsoft also offers several enterprise plans that range from the basic and low-cost (Office 365 Hosted email - Exchange Online Plan 1, which costs just $48 per user per year but only provides Exchange Online-based services) to the full meal deal (Office 365 Enterprise E4, which costs $264 per year but throws in everything but the kitchen sink, including cloud-based PBX replacement technologies). Each of these account types is similar in that all have no account number limits (like the small business offerings and Midsize Business) and all include on-prem Active Directory integration.

Compared to the small business versions, the Office 365 subscriptions for larger businesses are basically similar but oriented at bigger businesses, of course. They're still based on Exchange Online and so on, and not the consumer-oriented Outlook.com, OneDrive and Skype.

And they are also not Microsoft accounts by default. They're work accounts. Office 365 for business accounts.

Never the twain shall meet

What confuses people here, I think, are the identical and similar brands used to describe sometimes very different things.

That is, Office 365 Personal and Home (and University) don't have a heck of a lot in common with the business-oriented versions of Office 365, beyond the fact that most include some form of access to locally installed copies of Office on PCs/Macs and iPads. The name is the same, but the underlying technology is different.

Office 365 Personal and Home (and University) require you to use a Microsoft account. (Or up to five Microsoft accounts with Home). The accounts you get with the various Office 365 for business subscriptions are not Microsoft accounts.

Office 365 Personal and Home (and University) use Outlook.com for email, calendar and contacts. Office 365 for business subscriptions use Exchange Online.

Office 365 Personal and Home (and University) use OneDrive cloud storage. Office 365 for business subscriptions use OneDrive for Business, which is part of SharePoint Online. OneDrive is an integrated part of Windows 8.1. But you can get desktop and Modern apps for OneDrive for Business if you wish.

Office 365 Personal and Home (and University) use Skype for online communications. Office 365 for business subscriptions use Lync Online.

So when you see news about "Office 365" you really have to pay attention. Is this something that affects the consumer/individual services, or the business services?

Likewise, it's possible—though not advisable—that you, as a user of an Office 365 business account, could visit, say, OneDrive.com (or whatever) and sign up for a Microsoft account, choosing to use your Office 365 business account email address as the Microsoft account. This would be confusing on a number of levels, but it would work. I don't think you should do that, and I use different personal (Office 365 Home) and work (Office 365 Small Business) accounts explicitly to maintain that separation.

Let me know if you have any questions. I'm reasonably sure I left something out, and if so, I'm happy to update and correct as needed.