Office 365 vs. Microsoft 365: Understanding Which Suite Fits Your Needs

Office 365 vs. Microsoft 365

Clearing the Confusion: Office 365 vs Microsoft 365

In the world of Microsoft cloud services, one question often arises: What is the difference between Office 365 and Microsoft 365? The similar naming has caused confusion among IT leaders and business decision-makers.

Microsoft’s rebranding and expanded offerings in recent years leave many unsure whether Microsoft 365 is simply a new name for Office 365 or a completely different product. Read our guide to Office 365 & Microsoft 365 Licensing Optimization.

In reality, Office 365 and Microsoft 365 are related but not identical. Office 365 refers to subscription plans that focus primarily on productivity tools and cloud services – the familiar apps include Outlook, Word, Excel, PowerPoint, Teams, SharePoint, and OneDrive.

By contrast, Microsoft 365 is a more comprehensive suite. It includes everything in Office 365 plus additional capabilities such as a Windows 10/11 operating system license and advanced security and device management tools (part of the Enterprise Mobility + Security package, or EMS).

In short, Office 365 is all about the core productivity apps, while Microsoft 365 bundles those apps together with your operating system and security tools under one license.

For decision-makers, cutting through this branding can be challenging. Microsoft 365 is often touted as the future-ready bundle, but you should evaluate if those extra features align with your needs.

The key is understanding your organization’s requirements: do you simply need the Office suite and cloud services (Office 365), or do you benefit from an all-in-one bundle that also covers devices and security (Microsoft 365)?

The following sections break down Office 365 vs. Microsoft 365 in terms of plans, features, costs, and how to choose the right path for your business.

Office 365 Plans Recap – O365 M365 Comparison Starting Point

To start any O365 vs M365 comparison, it’s important to understand what Office 365 offers on its own. Office 365 (O365) is essentially the core productivity suite delivered as a subscription service.

It launched as an online version of Microsoft’s Office apps and has evolved to include a variety of collaboration and cloud services.

Here’s a quick recap of the major Office 365 plans (often considered the “legacy” plans before Microsoft 365 came along):

• Office 365 E1: Entry-level enterprise plan. Provides access to web-based and mobile versions of Office applications (Word, Excel, PowerPoint, Outlook) along with business email via Exchange Online, 1 TB OneDrive cloud storage, SharePoint for intranet/content management, and Microsoft Teams for collaboration. Office 365 E1 does not include the fully-installed desktop Office apps on PCs/Macs. It’s suited for users who need lightweight, browser-based productivity and email.
• Office 365 E3: Mid-tier enterprise plan. Includes everything in E1 and adds the desktop Office apps (the full versions of Word, Excel, PowerPoint, etc. that you can install on devices). It also comes with additional features, such as email archiving & legal hold (for compliance), as well as advanced data loss prevention (DLP) capabilities. Office 365 E3 is a popular choice for organizations that need the full Office suite and more email/storage capacity, but it remains focused purely on productivity and collaboration tools.
• Office 365 E5: Top-tier enterprise plan. Includes all E3 features and further adds advanced security, analytics, and voice capabilities. For example, Office 365 E5 comes with Microsoft Defender for Office 365 (advanced threat protection for email & attachments), Power BI Pro for business analytics, audio conferencing and Phone System integration for Microsoft Teams (enabling advanced call/meeting functionality). Office 365 E5 is essentially the most feature-rich productivity suite Microsoft offers, covering virtually all Office 365 services with heightened security and analysis tools.

All Office 365 plans center on productivity. They deliver Microsoft Office applications and cloud services to users. Still, they do not include a Windows operating system license or the full suite of enterprise security and device management tools.

Companies choosing Office 365 typically handle device OS licensing separately (e.g., purchasing Windows 10/11 Pro or Enterprise through other agreements) and may use third-party solutions or additional Microsoft add-ons for things like device management or advanced security.

In summary, Office 365 plans are best suited for organizations that only need the core productivity suite and cloud collaboration services.

If your primary requirement is providing email, Office apps, and file sharing to users – and you have independent solutions for device management and security – Office 365 fulfills that need cost-effectively.

It’s a tried-and-true option for businesses that want to subscribe to the Office toolset without adopting Microsoft’s entire ecosystem of device and security management.

Microsoft 365 Plans – Difference Between Office 365 and Microsoft 365

What does Microsoft 365 (M365) bring to the table, and how is it different from Office 365? Microsoft 365 was introduced as a broader offering that combines Office 365 with additional operating system and security/management capabilities.

In other words, Microsoft 365 includes everything Office 365 has, and then adds more on top to create an integrated IT bundle.

Key Microsoft 365 Enterprise plans include:

• Microsoft 365 E3: Encompasses all the Office 365 E3 productivity features, then adds Windows 10/11 Enterprise licensing and the Enterprise Mobility + Security (EMS) E3 suite. EMS E3 provides services like Microsoft Intune (for mobile device and application management), Azure Active Directory Premium P1 (for advanced identity and access management, e.g., conditional access policies), and Azure Information Protection (for data classification and rights management). With M365 E3, each user license covers Office apps on multiple devices and upgrades those devices to Windows 11 Enterprise, all managed and secured through Microsoft’s cloud. This plan is essentially Office 365 E3 plus a Windows OS and a bundle of security tools.
• Microsoft 365 E5: The most comprehensive plan, bundling Office 365 E5 with Windows 10/11 Enterprise and the full EMS E5 suite. In addition to O365 E5’s advanced productivity features, Microsoft 365 E5 includes top-tier security and compliance tools: Azure AD Premium P2 (with advanced identity protection and governance features), Microsoft Defender for Endpoint (deep endpoint threat detection and response, beyond just email protection), Microsoft Defender for Cloud Apps, and advanced compliance solutions (e.g. Insider Risk management, advanced eDiscovery). This plan provides large organizations with an all-in-one package for productivity, operating systems, and the highest level of security/compliance capabilities.

In addition to the Enterprise E3/E5 plans, Microsoft 365 offers Business plans aimed at small and medium-sized organizations (SMBs):

• Microsoft 365 Business Basic & Business Standard: These plans are similar to the former Office 365 Business plans, offering core Office apps and services for businesses with up to 300 users. Business Basic offers the web and mobile versions of Office apps with services like Exchange email, Teams, SharePoint, and OneDrive. Business Standard adds the fully installed Office desktop applications on top of everything in Basic. Both focus on productivity and collaboration, similar to Office 365, and do not include advanced device management or OS licensing.
• Microsoft 365 Business Premium: This is the SMB-oriented plan that mirrors many aspects of the enterprise-level M365 E3, tailored for up to 300 users. Business Premium includes all the Office apps and services of Business Standard and adds key security and device management features. Specifically, it comes with Intune for device management, Azure AD Premium P1 for identity/security, and offers upgrade rights to Windows 11 Pro for your users’ devices. In effect, Business Premium is an “all-in-one” bundle for smaller organizations, bringing some of the EMS and Windows integration benefits to the SMB market.

So, what’s the core difference between Office 365 and Microsoft 365?

In summary, Microsoft 365 is a superset of Office 365. Any Microsoft 365 plan will include the Office 365 functionality, plus additional features (OS and security) that Office 365 alone doesn’t offer.

Microsoft’s naming change wasn’t just cosmetic; it indicates that subscribers get a broader IT solution (devices + security + apps) under Microsoft 365.

Another key distinction is Microsoft 365 Business vs Enterprise offerings. Microsoft 365 Business plans (Basic, Standard, Premium) have a user cap of 300 seats and slightly pared-down feature sets, targeting smaller organizations.

In contrast, Microsoft 365 Enterprise plans (E3, E5) have no user limit and include enterprise-grade capabilities suited for larger or more complex organizations (for example, advanced compliance features, unlimited email archiving, and enhanced analytics that aren’t in the Business plans).

Deciding between Business and Enterprise often depends on your size and requirements. A 200-person company might use Business Premium to save cost, but a larger company or one with more complex needs might require the unlimited scale and additional features of Enterprise plans.

For more insights, Choosing Between Microsoft 365 E3, E5, and F3: License Levels Explained.

Feature Differences – O365 vs M365 Licensing Breakdown

When comparing O365 vs M365, it helps to break down the differences by feature category.

Here are the key areas where Microsoft 365 provides additional value beyond what Office 365 offers:

• Windows Operating System License: Office 365 subscriptions do not include rights to the Windows OS. If you have Office 365 E3, for example, you must separately ensure your PCs have a licensed copy of Windows 10 or 11 (typically via OEM or volume licensing). Microsoft 365 E3/E5, however, includes a Windows 10/11 Enterprise license for each user. This means that with M365, upgrading all your users to the latest Windows Enterprise edition is included in the subscription. For instance, an organization running Office 365 E3 would need to purchase OS upgrades or licenses when moving to Windows 11, whereas Microsoft 365 E3 bundles those OS rights into the per-user plan. (On the SMB side, Microsoft 365 Business Premium similarly includes Windows 11 Pro upgrade rights for devices, whereas Office 365 Business plans did not include OS licensing at all.)
• Device Management (Intune): Office 365 by itself has no built-in device management for PCs or mobile devices. Companies using O365 often have to deploy separate tools or add-ons to manage device policies, software updates, and security configurations on employee devices. Microsoft 365 plans include Microsoft Intune as part of the EMS component (in Business Premium and in Enterprise plans via EMS). Intune allows your IT team to enforce mobile device management (MDM) and mobile application management (MAM) policies across Windows, macOS, iOS, and Android devices. With M365, you get a native solution for device management out of the box, integrated with Azure AD and your other services. In short, if unified endpoint management is a priority, Microsoft 365 provides it natively, whereas Office 365 users would need to integrate a separate solution or purchase Intune licenses separately.
• Security and Identity Features: Security is a major area of difference between Office 365 and Microsoft 365. With Office 365, you get some basic security capabilities. For example, Exchange Online in O365 includes built-in spam/malware filtering for email, and higher-tier plans offer data loss prevention (DLP) and basic message encryption. However, advanced security tools are limited or only available as separate add-ons in the Office 365 world. Microsoft 365, on the other hand, includes the Enterprise Mobility + Security (EMS) suite as a core part of its offering (in M365 Business Premium, E3, E5). This means:
  • Azure Active Directory Premium for advanced identity and access management. This enables features such as conditional access policies, multifactor authentication with custom controls, and easier single sign-on integrations. Office 365 by itself uses the free/basic Azure AD, which has limited features.
  • Microsoft Defender solutions for threat protection. Office 365 E5 does include Defender for Office 365 (which protects email attachments and links, and provides threat investigation for O365 data). Microsoft 365 E5 extends this with Defender for Endpoint (endpoint threat detection & response on Windows devices) and Defender for Cloud Apps for cloud application security. Even Microsoft 365 E3, while not as security-focused as E5, still provides a stronger security baseline than its Office 365 counterpart by including Azure AD Premium P1 and Intune, which enable features such as conditional access and device compliance policies to enhance security.
  • Information protection & compliance: Office 365 provides standard compliance features (e.g., content search, eDiscovery, basic audit logs), and Office 365 E3/E5 adds more (like archive mailboxes, advanced eDiscovery in E5). Microsoft 365 further integrates tools like Azure Information Protection (for classifying and encrypting sensitive files). It provides a more unified approach to compliance across devices and cloud applications via the EMS components. Essentially, M365 plans, especially at the E5 level, offer a one-stop shop for security and compliance needs that would otherwise require multiple separate licenses in the O365 scenario.
• Productivity Apps and Services: Both Office 365 and Microsoft 365 include the core set of productivity applications. There’s no difference in the versions of Outlook, Word, Excel, PowerPoint, etc., that you get – both O365 and M365 users receive the latest Office apps. Likewise, both include collaboration services such as Exchange Online (for email), SharePoint Online, OneDrive for Business, and Microsoft Teams. In other words, Microsoft 365 doesn’t give you “better Office apps” – it gives you the same Office apps plus additional products alongside. So in terms of pure productivity and collaboration features, Office 365 and Microsoft 365 are on par. The real differences lie in the surrounding ecosystem of device OS and security/management tools, rather than in the day-to-day apps themselves.
• Analytics and Add-ons: One notable feature in the top-tier Office 365 plan is Power BI Pro (included in Office 365 E5) for advanced data analytics and visualization. When you move to Microsoft 365 E5, that Power BI Pro benefit remains and is coupled with even more analytics and AI-driven features (for example, Microsoft 365 E5 users can take advantage of tools like Workplace Analytics/Viva Insights for organizational productivity insights). This is a minor point, but it illustrates that Microsoft 365 packages include all the extras that Microsoft offers. Suppose business intelligence or analytics tools are something you need. In that case, those are only included in the highest tiers of either suite (E5), and Microsoft 365 E5 ensures you have them along with security and OS. In contrast, Office 365 E5 would still leave OS and device management outside the bundle.
• User Limits and Flexibility: A quick note on licensing scope – Office 365 enterprise plans (E1, E3, E5) and Microsoft 365 enterprise plans can be mixed within an organization. Some companies might keep certain users on cheaper Office 365 plans while power-users or execs get the full Microsoft 365 suite. Microsoft 365 Business plans, as mentioned, cap at 300 users; if you grow beyond that, you must move to Enterprise plans. The flexibility with Office 365 is that you buy à la carte the services you need (and you can still do that to an extent), whereas Microsoft 365’s philosophy is to give a comprehensive package. Depending on your needs, you might value that simplicity, or you might prefer the piecemeal approach. It’s possible to start with Office 365 and later add components (like EMS) or upgrade to M365 as your needs evolve.

To visualize some differences clearly, below is a quick comparison of key components between Office 365 and Microsoft 365:

(✔️ = included, ❌ = not included)

As shown above, Microsoft 365 provides a more holistic IT environment under one subscription, whereas Office 365 stays focused on the applications and cloud services.

This breakdown illustrates that if you need features such as a Windows OS for each user or robust device management and security controls, Microsoft 365 addresses these needs directly. If not, Office 365 lets you pay just for productivity tools without the additional layers.

Cost Consideration – Microsoft 365 vs Office 365 Pricing

Cost is often the deciding factor when comparing Microsoft 365 vs Office 365. Because Microsoft 365 packages more services, it does carry a higher price tag per user.

Let’s outline the key cost considerations:

• Subscription price difference: Office 365 plans are generally less expensive per user than equivalent Microsoft 365 plans. For example, at the enterprise leve,l Office 365 E3 is roughly around $23 user/month, whereas Microsoft 365 E3 is around $36 user/month. That difference (about 50% higher cost) reflects the added Windows OS license and EMS security suite included in M365 E3. Likewise, for small businesses, Microsoft 365 Business Premium costs more per user than a simpler Office 365 offering (like Business Standard) because of the extra security and device management features bundled in.
• Avoiding redundant costs: If your organization already has investments in certain areas, Microsoft 365 could lead to paying twice for similar capabilities. For instance, you might already own Windows 10/11 licenses for all your PCs, or you might be using a third-party mobile device management and security solution. In such cases, an Office 365 plan (for just the apps and cloud services) might be more cost-efficient, since Microsoft 365’s higher price would essentially make you repurchase OS licenses or duplicate tools you already have. This is where a bit of skepticism is healthy — Microsoft’s marketing of M365 might push the “all-in-one” benefits, but if you don’t actually need those extras, why pay more?
• Total cost of ownership (TCO): On the flip side, consolidating services with Microsoft 365 can potentially lower your total cost of ownership in the long run. Suppose you are paying separately for things like endpoint security software, device management platforms, or Windows OS upgrades. In that case, the single Microsoft 365 subscription might actually save money by replacing those third-party costs. Beyond direct license fees, consider administrative overhead as well: one integrated solution can simplify management and support, resulting in indirect savings. For example, an organization that pays for Office 365, a mobile device management subscription, and separate security tools might find that moving to M365 E5 streamlines everything (one bill, one admin portal) and could reduce complexity and support effort.
• Incremental upgrades vs. all-in-one bundle: Microsoft 365’s value is highest when you truly utilize all components. If you foresee a need to upgrade to Windows 11 Enterprise across the board (especially with Windows 10 reaching end-of-life in 2025) and you want to strengthen cybersecurity and compliance, then jumping to Microsoft 365 E3/E5 can be a strategic move despite the higher per-user price. The cost difference is justified by avoiding separate purchases and by potentially improving security (preventing even one serious breach or avoiding regulatory fines can easily outweigh subscription costs). Conversely, if you plan to stick with existing tools or older OS for a while, you might not get immediate value from the all-in-one approach.
• Budget and roadmap alignment: Ultimately, deciding between O365 and M365 comes down to aligning with your IT budget and long-term roadmap. If budgets are tight and the immediate priority is just to equip users with Office apps, email, and file sharing, Office 365 gives the core functionality for less money. Suppose the budget allows and the strategy is to modernize and unify your IT environment (devices, security, and productivity under one umbrella). In that case, the extra spend on Microsoft 365 can be seen as an investment in a more cohesive platform. It’s about where you want to allocate resources: point solutions to fill gaps at lower cost, or an integrated ecosystem that might drive efficiency and innovation over time.

In summary, Microsoft 365 will typically cost more per user than sticking with Office 365, but it also delivers more value per user. The crux of the cost consideration is evaluating whether those extra components are things you truly need (and would otherwise pay for separately) or not.

A careful cost comparison should factor in not only the subscription fees but also the potential savings or costs in areas such as security, device management, and administrative overhead.

Choosing the Right Path – O365 M365 Comparison Guide

Choosing between Office 365 and Microsoft 365 isn’t one-size-fits-all.

The right path depends on your organization’s specific needs, existing infrastructure, and plans. Consider the following guidance when making your decision:

Choose Microsoft 365 if:

• You want a unified solution for productivity, operating system, and security. Organizations with a “Microsoft-first” IT strategy can leverage M365 to cover most needs in one package.
• Your company lacks advanced security or device management tools and would benefit from Microsoft’s integrated security stack (Azure AD Premium, Intune, Defender) to protect data and manage devices centrally.
• You plan to upgrade to Windows 11 Enterprise or need to standardize OS licensing across all users. Microsoft 365 provides those OS rights and simplifies device provisioning/upgrades without separate Windows licenses.
• Simplifying vendor management and reducing complexity are priorities. With M365, you have one vendor and one admin portal covering apps, devices, and security, which can streamline IT operations and support.
• You are considering the long-term total cost of ownership. You are willing to invest more now to potentially save later by consolidating tools (for example, replacing separate third-party security or management solutions with integrated Microsoft 365 features).

Choose Office 365 if:

• Your primary requirement is core productivity tools (Office apps, email, file sharing), and you’re managing other needs (device management, security) with separate solutions, or you don’t require Microsoft’s advanced tools. Office 365 lets you get the essentials without paying for extras.
• Budget constraints are significant. Office 365 delivers the necessary productivity services at a lower price per user. It’s often the better fit for organizations that need to provide Office functionality to many users while keeping costs down.
• You prefer a modular approach to IT. Some organizations intentionally mix and match services – for example, using Office 365 for collaboration but a different vendor for security or device management. Office 365’s standalone nature gives you the flexibility to integrate only the services you want, instead of an all-in-one bundle.
• You are not ready for a full Microsoft ecosystem commitment. If adopting Microsoft 365’s extras would be redundant with your current tools or would require changes in your workflows that you’re not prepared for, sticking with Office 365 ensures you only adopt what you need.
• Your organization is small and does not require enterprise-grade security or device management. In this case, even Microsoft’s branding suggests using a basic Microsoft 365 Business plan (which is essentially the old Office 365) without the premium add-ons. Small teams with simple needs can stick to just the Office apps and cloud services to save money and reduce complexity.

Often, the decision isn’t permanent. Many businesses start with Office 365 and later upgrade to Microsoft 365 when they recognize the need for integrated device management and security.

Microsoft provides upgrade paths – for example, you can add an EMS subscription to an Office 365 E3 plan to approximate M365 E3, or seamlessly transition from Office 365 Business plans to Microsoft 365 Business Premium.

This means you can adopt the broader suite when it aligns with your IT roadmap, without losing the investments in your existing licenses.

Key takeaway: Align your choice with your company’s needs and strategy, not just with Microsoft’s latest branding. Microsoft 365 can be powerful for a forward-looking organization that wants everything under one roof.

In contrast, Office 365 remains a viable and cost-effective choice for those who just need the productivity backbone. The goal is to choose the suite that fits your needs – whether that means staying lean with Office 365 or going comprehensive with Microsoft 365.

FAQ – Office 365 vs Microsoft 365

Q1: What’s the main difference between Office 365 and Microsoft 365?
A: Office 365 is a subscription for productivity apps and cloud services, while Microsoft 365 includes everything in Office 365 plus a Windows 10/11 OS license and advanced security/device management tools. In short, Microsoft 365 = Office 365 + OS + security.

Q2: Is Microsoft 365 just a rebrand of Office 365?
A: Not exactly. Microsoft 365 isn’t just a new name for Office 365; it also includes a Windows OS license and security suite that Office 365 alone didn’t have. (Microsoft did rename some Office 365 subscriptions to Microsoft 365 in 2020, but the offerings are not identical.)

Q3: Which is cheaper, Office 365 or Microsoft 365?
A: Office 365 plans cost less per user because they include fewer services. Microsoft 365 costs more by bundling the OS and security tools. If you don’t need the extras, Office 365 is cheaper; if you do, Microsoft 365 can be cost-effective overall by replacing separate tools.

Q4: Can I still buy Office 365 in 2025?
A: Yes. As of 2025, you can still purchase Office 365 plans (especially enterprise tiers like E1, E3, E5). Microsoft 365 is the newer brand, but the core Office 365 services remain available under their original or updated names. Essentially, “Office 365” as a product still exists, even if some plans have been rebranded under Microsoft 365.

Q5: Should small businesses choose Microsoft 365 Business or stick with Office 365?
A: For most SMBs, Microsoft 365 Business Premium offers great value by including security and device management along with Office apps. However, if you only need email and basic Office apps without the extras, a simpler Office 365-type plan (like Microsoft 365 Business Standard) is more economical. The choice depends on whether the business will utilize the additional features or simply require the fundamentals.

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