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There is a different pricing structure, but functionally there isn't a lot of difference. In a recent pcworld article, they compared it to a rent vs. own model, and it makes sense to me to think of the cloud-based offering as a rental, which also means recurring costs. With Office 2013, you buy it once (at a higher initial price) and use it indefinitely. Beyond that, there are no concerns about having an internet connection when you are using Office 2013, since it doesn’t depend on the cloud. To be honest, I’m not sure what off-line capabilities Office 365 has, so it may still be partially functional without an internet connection.