Can Office 365 Help Microsoft’s Future?

Microsoft today took the wrappers off their Office 365 offering and allowed any business to try out the beta version. The general availability is scheduled for sometime later in the year. Office 365 is Microsoft’s answer to other online Office Suites such as Google Apps and Zoho Office Suite. After dilly dallying for a long time on the SaaS front, Microsoft is firmly pushing themselves to compete in this market segment. Office 365 is targeted towards individual professionals, small businesses and enterprises.

Microsoft, for a long time, were rejecting the reality of SaaS adoption among the business users and were insisting that the “light weight” SaaS applications stood no chance in front of their “feature filled” desktop applications. However, we saw a strong adoption for Google Apps from businesses of all sizes and shapes. In fact, Google was aggressive in luring the existing Microsoft customers to their online tools by offering connectors to the traditional Microsoft software they have been using so far. Eventually, Microsoft realized the mistake of not having a cloud based offering and moved in with their Office 365 announcement. Microsoft’s pitch with Office 365 is targeted towards those businesses who still use in-house IT and not the ones who are already moving applications such as email, collaboration, productivity tools, etc. to the cloud.

Microsoft Office 365 comes in two flavors: P Family targeting individual professionals and small businesses and E Family targeting enterprises. The small business version offers the following features:

• Email and Calendaring
• Office Web Applications
• Sharepoint online for collaboration
• Lync Online for unified communications

They also offer a 99.9% uptime guarantee. Their pricing starts at $6 per user per month and maxed out at 50 users. They also bundle their desktop office suite as a service instead of an one time $499 pricing. They extend this offering for enterprise with more enterprisey features like better administrative capabilities, enhanced security, archive capabilities, PBX integrations, etc.. Their enterprise pricing can be found here.

My POV

I have long been critical of Microsoft for not playing in this space. I am glad that they are finally waking up to the cloud reality and the intense pressure coming from Google. The following are some of my random thoughts about Office 365 and the positioning in this market segment.

• I had an opportunity to check out Office 365 at a very alpha-ish stage. It was promising and I thought it was a good fit for SMEs wanting to move their office productivity and collaboration apps to the cloud
• They are still tightly bundling these online services to their desktop suite which may result in lower pace of innovation with their cloud offerings. This may also be a big put off for many companies who expect the online suite to be an alternative to Office desktop suite than a complementary one
• However, the integration may be advantageous for Microsoft as a large segment of users are still wedded to using the desktop apps. This offers Microsoft an opportunity to onboard these users to cloud and keep them away from possible Google poaching
• Google’s advantage lies in their free offering and price advantage over Office 365 on the paid plans. With their free offering, Google will gather most of the professionals and small businesses. With “ads on email” becoming less of a stigma in the business world today, Google has the advantage. Google will also have an advantage with modern looking enterprises who want to break away from the shackles of desktop software and vendors from that era. But Microsoft still has a large piece of the pie available for grabs on the plate and they definitely hold advantage with conservative organizations who are still reluctant to trust browsers
• Another advantage with Google is their Google Apps marketplace. I think it was one great move by Google which will reap them rewards in the long term. As we move into a more open world of computing, organizations are reluctant to keep all eggs in one basket. Best of breed approach is gaining more traction than single suite of applications. I think this trend will help Google in the long run

Having said that the Office online space is still in very early stages. We will have to wait and see how Microsoft is going to position their services in the next year and a half before we can conclude one way or other. I love competition in a market segment because it is always beneficial to the users. In that sense, this is a welcome move by Microsoft and it will add more pressure on Google and others to innovate.

Related articles

• Microsoft’s Office 365 Hits Public Beta (readwriteweb.com)
• Microsoft brings cloud productivity to all with Office 365 beta (venturebeat.com)
• Microsoft Office 365 Beta Opens for Business: What’s Inside (pcworld.com)
• Microsoft Tries To Bury Google Apps With Office 365 (MSFT, GOOG) (businessinsider.com)
• Office 365 public beta now available (winrumors.com)
• Update: Microsoft broadens Office 365 beta, launches app store (infoworld.com)
• Office 365 Open Beta: The Gloves Are Off (conceivablytech.com)