Software no longer comes on a CD that is bought in a shop but instead from the internet, and Office is managing this transition in a way that is totally new to Microsoft.
Office 365, released in 2013, is an attempt by Redmond to bridge the gap between what it's selling - in this case Office - and how people now purchase software, i.e. downloaded from the internet, with a price-point to match.
Microsoft's ability to do this, and it did so for many years, was down to its monopoly on the distribution of software, driven by the company's total dominance over what software people used.
Because Microsoft didn't control the dominant operating system that people used anymore - at least outside of work - its ability to sell software to complement the OS slipped somewhat, leading to the rise of iWork on iOS and Open Office on Android, amongst other examples.
The most worrying trend for Microsoft is that because Office is now associated with the workplace, people are not willing to pay for it elsewhere and this has led to a new avenue for Microsoft: freemium.