Some companies will be motivated by the expanded features, but others might not be so easily sold. Microsoft's hurdles include the fact that existing Office licenses are adequate for many business needs, hesitancy surrounding the new products' subscription-based distribution model and the growing acceptance of competing solutions.
The first of the new offerings, Office 365 Pro Plus runs $144 per user per year and provides access to Word, Excel, PowerPoint, OneNote, Outlook, Publisher, InfoPath and Access. The products are streamed rather than locally installed, meaning that users can access and modify their files by logging into Office 365 from any of up to five licensed devices. Pro Plus will not overwrite or interfere with previously installed versions of the suite, allowing users to remain productive when Internet access is not available.
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Intended for companies with up to 10 employees, Office 365 Small Business Premium runs $150 per user per year. In addition to the various Office apps, it adds business-grade email, shared calendars, Web tools and HD videoconferencing capabilities. Many businesses in this market segment rely on a single IT generalist. Others manage without dedicated IT altogether. These points evidently aren't lost on Microsoft, which has promised that Small Business Premium can be deployed without IT expertise.
Office 365 for Midsize Business, meanwhile, is aimed at companies with up to 250 employees. An annual subscription of $180 per user delivers all the Office 365 Pro Plus features plus access to Exchange Online, Lync Online and SharePoint Online. It also includes several IT-oriented features, such as Active Directory integration, e-discovery capabilities and Web-based admin controls.
The new products join a slew of existing options for consumers and enterprises. Though the variety is potentially confusing, Microsoft appears intent on carving out clear options for small and midsize businesses (SMBs). Indeed, in a statement announcing Wednesday's launches, Redmond trumpeted its success with such customers. Calling Office 365 "one of the fastest-growing businesses in [company] history," the media release noted that 1 in 5 of Microsoft's enterprise customers uses the service, up from 1 in 7 a year ago, and that the SMB business has grown by 150% over the last year. Eager to continue this progress, the software giant has established a website with testimonials from recent adopters.
Despite the success, Microsoft faces unanswered questions. The focus on cloud computing and multi-device licensing makes sense in that it further Redmond's presence among mobile users, a group that in many cases favors iOS and Android devices to Windows-flavored alternatives. With the full version of Office available on any Microsoft device at any time, a Surface tablet or Windows Phone 8 might become more appealing from a productivity standpoint than an iPad.
The much-debated subscriptions make a certain amount of sense, too. Microsoft Office is a mature product, and many companies can afford to skip several generations before upgrading. Subscriptions erase these starts and stops with a perpetual revenue stream. Still, some users have taken umbrage with Redmond's arguably strong-armed tactics, which include limiting standalone Office 2013 purchases to a single machine and disallowing users from transferring these licenses.
Microsoft must also contend with the growing popularity of competing products, such as Google Apps for Business. Office's rich feature set remains unsurpassed in certain regards, such as spreadsheet editing. For many tasks, particularly basic word processing, the alternatives will suffice, but between Office's features and installed user base, Redmond still carries meaningful advantages. Even so, its lead has gradually narrowed.
For many, the new products' collaboration focus is among the more noteworthy upgrades. Microsoft intends to further develop this vein, with Lync-Skype connectivity expected to arrive by June.