Unlike Office 2010, Office 2013 does not work with Windows XP or Windows Vista. Yet the latest data from NetApplications shows that roughly 45 percent of all Internet users still rock those two aging operating systems. If you’re part of that sizable horde, there’s absolutely no reason to buy Office 2013—it won’t work on your system. And because an Office 365 Home Premium subscription simply lets you install the latest version of Office—Office 2013, again—on up to five PCs, you’ll want to pass on that as well.

Office 365 Home Premium sounds like a killer deal for small businesses. It offers the latest Office software—including Outlook, Publisher, and Access—on up to five computers, along with 20GB of SkyDrive cloud storage and 60 monthly Skype minutes, all for less than $10 per month. Where do I sign?

You don’t. The licenses for Office 365 Home Premium and Office 2013 Home & Student prohibit using the software for commercial purposes. Currently, a small-business owner’s only option is to buy pricey per-PC licenses for either Office Home & Business 2013 ($220; includes the core programs plus Outlook) or Office Professional 2013 ($400; adds Access and Publisher). Neither of those includes Office on Demand, or the Skype and SkyDrive benefits. Don’t despair, though: Microsoft plans to launch Office 365 Small Business Premium on February 27, at a cost of $150 per user per year.

Most of us have been using the desktop version for years. Office 365 and Office Web Apps are recent additions to the family. Office Web Apps is a free and limited Internet version of Office that’s integrated with SkyDrive. You’ll use Web Apps to view and edit files on devices that don’t have Office installed.
Office 365 is a subscription-based plan that offers Office functionality in the cloud. It’s a hybrid (of sorts) between the desktop version and the free web apps. Excuse the marketing hype, but Office 365 offers desktop functionality with web-based convenience supporting multiple devices. That last part is what matters to users and clients.

Office 365 requires Windows 7 or 8. Mac users need OS X 10.6 (or later). You’ll also need Internet access to install Office 365 and to activate and manage your subscription (once a month). You’ll need a compatible browser. IE 9, Firefox 12, Safari 5, or Chrome 18. Regarding hardware, at the very least, your local system will need the following.

  • 1 GHz processor or Intel processor (for Macs).
  • 1 GB or RAM (32-bit); 2 GB RAM (64-bit).
  • 3 GB of available hard disk space; 2.5 GB for Macs.

When I say at the very least, I mean that Office 365 will run, but it will be slow (really slow… really, really slow). Users with older systems might face significant upgrade costs before they can move to Office 365.