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Making sense of the new Microsoft Office offerings

(MoneyWatch) It's that time of the decade again: Every three years like clockwork, Microsoft (MSFT) rolls out a new version of its Office products and invites individual users and businesses to try out a cavalcade of new features. Of course, there's often no compelling reason to upgrade, and many people choose to skip several new versions of Office until they eventually get it with a new PC, for example.

But it's a little more complicated with the latest Office renovation. If you're considering stepping up to the newest version, you have more choices than ever, including something called Office 365. What does it all mean?

Let's start with Office 2013. If you want to get Office the traditional way -- on a disc and in a box -- then you'll want Office 2013. There are several flavors of Office 2013, from the Home and Student version (Word, Excel, PowerPoint and OneNote for $140) to Office Home and Business (Word, Excel, PowerPoint, Outlook and OneNote, $220) to Office Professional (everything, including Access, for $400). Office 2013 works the way you'd expect: It installs on your computer's hard drive and the user license only allows you to install it on one PC.

New for 2013, though, is a new variety of Office, called Office 365. You can think of Office 365 Premium as software-as-a-service -- you pay a monthly or annual subscription, and have full access to the program as long as you subscribe. If you stop your subscription, you keep any documents you created, but the Office software no longer works.

Office 365 Home Premium costs $10 a month or $100 a year, and gives you the right to install it on as many as five computers (both PC and Mac). It includes all of the components in Office 1013 Professional, plus 60 minutes of Skype calling per month, and 20GB of SkyDrive storage (in addition to whatever storage space you already have).

For a side-by-side comparison of the various versions of Office, check out the "choose your Office" chart on Microsoft's website.

And don't forget that there's yet another version of Office out there as well: the Office Web Apps, which are Web-only versions of Word, PowerPoint and Excel that you can access from the Create menu on the SkyDrive website. The Office Web Apps are free to use and work in any Web browser.