Meanwhile, plan A2 of the upcoming will be free for students, faculty and staff, and prices for other education plans for staff and faculty have been "reduced significantly," a Microsoft spokeswoman said via email. The A2 plan includes hosted Exchange, SharePoint, Lync and Office Web Apps. Office 365 for Education will be launched in the summer.

A caveat is that the new prices apply only to new customers and to existing customers when their contracts are up for renewal. If, for example, a company is in the sixth month of a one-year Office 365 deal, they will pay the old, higher prices for the remaining six months, and renew the contract at the new, lower prices.

Customers who select the enterprise plans -- E1 to E4 -- sign up for annual contracts, while small companies that choose the P1 plan renew on a month-to-month basis.

The IDG News Service