The Real Office 365 Innovation

The new Office 365 is a major push by Microsoft into the cloud-based and services-based world. This time the push is for a major company cash cow, which also makes it a high-stakes move. Yet there is a significant upside.One of the best things Office 365 promises to do is eliminate the confusing array of Office-related offerings that Microsoft currently has, including Business Productivity Online Suite, Microsoft Office Live Small Business and Live@edu. Microsoft is finally leveraging one of its best brand names, not hiding it behind a train of confusing buzzwords.

Yet for Microsoft, the biggest innovation promised by Office 365 is continuous revenue. They are indeed taking on additional service responsibilities with a cloud-based offering, but also taking in somewhere between $2 and $24 per month for each user. Think about the company still using the ten copies of Office 2003 they bought back in 2004 and have been using for six years. Perhaps they spent a total of $2,000 for those licenses; amortizing the initial license price, it's cost about $2.78 per user. The longer they continue to use Office 2003, the more they save.

That same ten-user business will pay $6 per user per month, minimum, for Office 365. That's quite a cost increase, although it doesn't require the up-front purchase like Office 2003 did so it won't seem quite as painful. The business does, of course, get a more modern and powerful piece of software and services as well, but these may be things they don't need or that overlap with other services the company already purchases.

Microsoft holds another wild card when it comes to Office 365 and piracy control. In general, it is much easier to control licensing when users are connected to the cloud. The license can be bound to specific devices and limited to one active user per "seat" if that's what Microsoft decides to do. Since Office is probably the most pirated software on the face of the planet, this move to Office 365 could mean a big boost to Microsoft's bottom line.