Microsoft’s Office 365: Success or Failure?

Is Microsoft’s Office 365 a success?

A little over a year after its cloud-based productivity suite hit the market, Microsoft still isn’t sharing much in terms of customer data. The company claims healthy growth rates, but the lack of hard numbers (aside from the occasional “Office 365 adoption increases by X percent in Y region,” which means precious little without a baseline figure of some sort) makes it hard to determine whether Office 365 is putting up an effective fight against Google Apps.

Based on public announcements, Office 365 seems like a platform on the offensive: Microsoft recently announced the launch of an education edition for schools along with one for government workers (the latter features the same productivity tools as “regular” Office 365, albeit with the ability to store data in a segregated community cloud). The new Office 365 Open allows Microsoft’s partners to resell the platform to customers.

At the same time, however, there are indications that Microsoft is trying to prod adoption of the platform—specifically, via price cuts of up to 20 percent for most enterprise plans. “As we rapidly add customers, the cost to run Office 365 becomes more efficient,” Kirk Koenigsbauer, a member of Microsoft’s Office division, claimed in a March blog posting. “With these efficiencies, we’re able to pass on savings to make it even more affordable for customers of all sizes to move to Office 365.”

Whether or not customers are indeed adopting Office 365 in sufficient numbers, the platform has proven a success in at least one respect: ensuring that Google doesn’t have an unimpeded run of the cloud-productivity market. That being said, Google has no intention of letting Microsoft dominate the conversation; its recent acquisition of QuickOffice, a popular productivity suite for mobile devices, will almost certainly augment its existing offerings.

Although the cloud-based productivity market doesn’t seem likely to eclipse the one for traditional, desktop-based software anytime soon, it’s clear that the cloud will play a greatly increased role in years ahead. Microsoft has been very public about its “all in” strategy with regard to the cloud; in addition to Office 365 and cloud platforms such as Azure, the company is working cloud functionality into products such as the upcoming Windows 8, which offers an app store and integrated SkyDrive.

In the meantime, Microsoft depends on traditional products such as Office and Windows for the lion’s share of revenue. “Cloud” might be the buzzword of the moment, but it’s a long way from serving as Redmond’s financial backbone. Office 365 is one of the first steps toward changing that—if it’s selling in sufficient numbers.

 

Image: Microsoft

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