Revenue in the Office division fell from the previous year during the three months ending in December, partly because many prospective buyers have been awaiting the latest version.
Microsoft's stock gained 10 cents Tuesday to close at $28.01. The shares are up by less than 1 percent since Microsoft released Windows 8 to great fanfare three months ago. Meanwhile, the benchmark Standard & Poor's 500 index has climbed by about 7 percent.
Besides getting access to the suite's programs, 365 Home Premium subscribers receive 20 additional gigabytes of storage on Microsoft's SkyDrive to supplement the 7 gigabytes that the company gives away to accountholders for free. Subscribers also will get 60 minutes of free international calls on Microsoft's Skype service for Internet phone calls and video chats.
College students and teachers will be able to buy Office 2013's online product for $80 for four years, which works out to about $1.67 per month. This option requires proof of student status. A variety of Office subscriptions are also being offered, with monthly fees ranging from $6 to $20 per user. More information can be found at: http://www.microsoft.com/en-us/office365/compare-plans.aspx .
The online push reflects Microsoft's recognition that people want access to documents and email on whatever Internet-connected device they might have, wherever they may be, whether it's at work, home or a store while running errands.
"The technology needs to be able to move with you," Schneider said.
It's the first time that Microsoft has tried to persuade consumers that a recurring online subscription is the best way to buy and use Office. Microsoft had previously sold online Office subscriptions primarily to small businesses.
"Over time, the majority of the billion-plus people using Office will be using the Office 365 service," Ballmer predicted in his blog post.
The attempt to sell online Office subscription to consumers comes nearly seven years after Google unveiled its own Internet bundle of word processing, spreadsheet and email programs. Google gives away a basic version of those applications, and charges subscriptions for more sophisticated packages aimed primarily at small businesses.
Microsoft's decision to reshape Office into an online service makes sense, although it may take customers a while to embrace the concept, said Edward Jones analyst Josh Olson. He suspects major companies that rely on Office probably will be among the last users to make the switch.
"This is a good innovation, but the uptake may be slow to begin because it is so different," Olson said.