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Microsoft continues subscription push with new Office 365 versions

Microsoft hopes its new Office 365 offerings will make a subscription-based model more enticing to customers.

Microsoft continued its aggressive push into the services market this week with three new Office 365 offerings aimed at business users that will be available through annual subscriptions.

One offering that is designed for large enterprises, called Office 365 ProPlus, can be streamed from a server to user desktops and live side-by-side with existing versions of Office. This is a way to cut down on the expense and time involved in IT admins upgrading hundreds of users to the new version. It also allows users more time to gradually adapt to the functionality in new versions, Microsoft officials said.

While many analysts and users believe Microsoft’s attempts to switch its largest customers to a subscription-based model may prove daunting, if it succeeds, the move will give Microsoft a regular revenue stream at a time when there is a high penetration of corporate Office users, said Carl Brooks, an analyst with New York-based 451 Research.

“Desktop sales have been saturated for a while now, and Microsoft needs ways to keep the gravy train rolling,” Brooks said. “As long as a viable, low-cost alternative doesn't show up out of the blue they'll have us all arm-chairing in lockstep for some time to come.”

Office 365 ProPlus, which includes Word, Excel, PowerPoint, OneNote, Outlook, Publisher, InfoPath and Access, can be licensed on up to five devices -- including Macs. A significant change however, is that the license is tied to the user not the device.

Microsoft socializes Office 365 with updates

In concert with the new desktop offerings, the company also announced the availability of the updated, online server-based versions of Office 365, which includes Exchange, SharePoint and Lync. Each of the new offerings includes capabilities designed to exploit features in the updated Office 365 desktop suite. These capabilities enhance collaboration and communications among groups of users, Microsoft officials said.

“Some of the new capabilities in SharePoint 2013, Lync 2013 and Exchange 2013 -- along with the new Office clients together -- are going to light up new functionality across the all of Office business offerings,” said Julia White, General Manager with Microsoft’s Office Division.

Some users have expressed reservations about switching to a subscription model.

“It is an interesting model and innovative. But at the same time, it is such a change of mindset for people," said Mike Drips, information architect with CSC in Houston, Texas. "I think it will take people quite a while to run down the cost benefits of this -- if there turn out to be any,”

Pricing rundown on new Office 365 offerings

Office 365 ProPlus is available as a standalone offering for $144 per user for an annual subscription. It is also is included in the updated premium Office 365 Enterprise offerings. Prices start at $8 per user per month and range up to $20 per user per month.

Office 365 Midsize Business is the new offering aimed at shops with 10 to 250 employees and also includes Office 365 ProPlus. It has many of the same applications as the version for larger enterprises, but also features more simplified IT tools, along with Active Directory integration, a Web-based administration console and business hours phone support. Pricing is $180 per user per year, or $15 per user per month.

Office 365 Small Business Premium is intended for shops with one to 10 employees and contains the full set of Office applications, as well as business-class email, shared calendars and a collection of Website tools. Pricing is $150 per user for an annual subscription, or $12.50 per user per month.

Microsoft’s argument for this model is that the convenience and longer-term cost savings of not having to manually install both servers and desktop software -- along with improved user productivity -- should soften the resistance.

“To get the whole productivity experience before, you had to stand up a SharePoint server, then an Exchange server and then the latest client offerings,” White said. “Now all you do is pay a single subscription and have that experience and everything is integrated.”

Some third-party companies appreciate some of the improvements made to the new online offerings, including enhanced document sharing, thanks to the tighter integration Office 365 now offers.

Based on feedback from users, Microsoft has attempted to make the new Office “social at its core,” by building in tight connections with its Yammer, Skype and SharePoint products, according to Kurt DelBene, president, Microsoft Office Division at this week’s video conference.

"Previously on Office 365, it was tough to share documents," said Peter Senescu, president and co-founder of MetaVis Technologies Inc. "You can now share documents much more easily -- and with users in other organizations -- as long as your governance policies are set up," he said.

Lync has also profited from new integration capabilities. Users can see if a colleague is in a meeting, in the office, or working on a document. This should serve to improve both employee communication and collaboration, according to the company.

Office 365 has improved “elasticity,” according to some observers. For instance, companies can more easily add or subtract both new applications, such as Lync, as well as users, thereby sidestepping often lengthy discussions on such matters.

"Before, [this Office 365 rollout] if you wanted to add Lync, it was a multi-month discussion," said Senescu. "Now, if you want to try it out, you can do a trial and give it a shot; it pops right up for you."

Senescu said Office 365 users should also appreciate the data loss prevention (DLP) feature available via Exchange Online. With DLP, companies can configure pre-existing or custom message policies to control message flow. Another Exchange integration feature that should win over customers is the ability to email links to documents and files living in a SkyDrive folder. This should help companies save valuable storage space that would be used when sending an actual file.

Let us know what you think about the story; email Site Editor Matt Gervais.

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I have no issue with the subscription model, however history shows that vendors who go down this path absolutely screw things up.

Because they now have to justify their existence, they introduce "eye candy" that causes problems or some intellectual midget decided that with their lack of real world understanding, they know better than those who are out there actually using the software. Case in point is ribbons; the biggest productivity killer.