Today the landscape shifts again as Microsoft has enabled basic editing and file creation in the free Office apps, no Office 365 subscription required -- although "advanced" editing features and PowerPoint's presenter view remain reserved to those with an active Office 365 Home or Business subscription. Otherwise, anyone with a free Microsoft login can use the apps at will.
Those apps now also have a new home on iPhone, with optimized UI for the smaller screen devices. The same free/subscribed split applies to the iPhone versions, but basic copy editing and modification are accessible to all. Microsoft has also expanded the cloud storage options for Office iOS by adding Dropbox support -- see the partnership announcement from earlier this week -- alongside MS's OneDrive (which itself got a big boost for paying users with the rollout of unlimited storage). There's also a preview Android release of Office, and a logical commitment to Windows 10 Touch versions down the road.
There's always the risk of some user confusion when freemium apps are feature-limited, and that's especially true of productivity apps; there may be a takeaway of "the iPhone version of Office can't do X" when in fact it can, if you choose to subscribe to Office 365. With some careful UX work and a clear message about what is and isn't enabled for free users, Microsoft may be able to avoid this trap and deliver a great tool for many iOS aficionados.

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