Office 365 vs Microsoft 365 Australia 2026 — the SKU map for AU buyers

Microsoft never retired the Office 365 SKUs. Despite the marketing push toward Microsoft 365 since 2020, Office 365 E1, E3 and E5 are still active SKUs available to Australian buyers in 2026 — and for some scenarios they're the right answer. The SKU map confuses procurement teams routinely because the names look almost identical.

The core difference in one paragraph

Office 365 = the productivity apps + cloud services (Exchange, SharePoint, Teams, etc.). Microsoft 365 = Office 365 + Windows + Enterprise Mobility & Security (EMS, which includes Entra ID and Intune). If you don't need Windows licensing or EMS — for example, your endpoints are BYOD, Mac-only, or already licensed via OEM Windows — the Office 365 SKU may meet your needs at materially lower cost.

AUD pricing comparison 2026

• Office 365 E1 — $14 AUD/user/month. Web/mobile Office apps only, no desktop install rights. Exchange, SharePoint, Teams, OneDrive 1 TB.
• Office 365 E3 — $36.20 AUD/user/month. Desktop Office app rights. Adds Compliance basic.
• Office 365 E5 — $51.60 AUD/user/month. Adds Defender for Office P2, Power BI Pro, Audio Conferencing, Phone System (without calling plan), advanced compliance.
• Microsoft 365 E3 — $59.40 AUD/user/month. Office 365 E3 + Windows 11 Enterprise + Enterprise Mobility & Security E3 (Entra P1, Intune Plan 1, basic Defender, AIP P1).
• Microsoft 365 E5 — $89.60 AUD/user/month. Office 365 E5 + Windows 11 Enterprise + EMS E5 (Entra P2, Intune Plan 1, full Defender suite, AIP P2, Identity Protection, PIM, MCAS).

The savings of Office-only

• O365 E3 vs M365 E3 — saves $23.20 AUD/user/month, $278 AUD/user/year. For a 200-user AU mid-market tenant, $55,680 AUD/year saved.
• O365 E5 vs M365 E5 — saves $38 AUD/user/month, $456 AUD/user/year. For 200 users, $91,200 AUD/year.

When Office 365 is the right answer

Three patterns where Office 365 makes sense over Microsoft 365 for Australian organisations:

1. 1Windows is OEM-licensed and Pro is enough — your laptop fleet ships with Windows 11 Pro (or Home upgraded to Pro), you don't need Windows 11 Enterprise features (Credential Guard, App Locker, DirectAccess), and you don't push the boundaries on Windows.
2. 2You already have EMS or third-party MDM — you've separately purchased EMS E3 or E5, or you run third-party MDM (VMware Workspace One, Jamf for Macs), or you don't deploy MDM at all. The EMS component of Microsoft 365 is redundant in that case.
3. 3Mixed estate where Office is everywhere but Windows isn't — you have a Mac-heavy creative team or a developer team on Linux, you license Office 365 for them rather than waste the Windows entitlement.

When Microsoft 365 is the right answer

1. 1Windows 11 Enterprise features are required — Credential Guard, App Locker, Application Guard, Long-Term Servicing Channel options.
2. 2You want Conditional Access — Entra ID P1 (in EMS E3, in M365 E3) is the minimum licence for Conditional Access. Office 365 alone doesn't include Conditional Access.
3. 3You want any meaningful endpoint management — Intune is in EMS, not Office 365.
4. 4You want Defender for Endpoint, Defender for Identity, Defender for Cloud Apps — these are in EMS E5/M365 E5, not in Office 365 E5.
5. 5You want Microsoft 365 Copilot at any scale — Copilot prerequisites assume the EMS controls are in place to prevent oversharing.

The mixed-licence strategy

Most large AU organisations end up with a mixed-licence position: M365 for the core workforce, O365 for specific cohorts that don't justify the M365 spend (frontline if F-SKU doesn't fit, third-party contractors, mid-tier admin staff in a different security model). The licensing administration cost of multiple SKUs is real, but the per-user saving usually justifies it past 500 users.

The 2026 question — Microsoft 365 Copilot changes the math

Microsoft 365 Copilot adds an additional $51 AUD/user/month on top of an eligible base plan. Eligible base plans include Microsoft 365 E3/E5/Business Standard/Business Premium and Office 365 E3/E5. For Australian organisations evaluating Copilot, the licence-stacking question gets real: O365 E3 + Copilot ($36.20 + $51 = $87.20 AUD) vs M365 E3 + Copilot ($59.40 + $51 = $110.40 AUD). The Copilot security and governance posture — which requires sensitivity labels, conditional access on Copilot endpoints, oversharing remediation — is meaningfully harder to achieve on O365 alone. Most Frontrow Copilot deployments standardise on M365 first.