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Is Microsoft's Office 365 bet starting to pay off in enterprise adoption?

Paul Rubens | June 13, 2013
Microsoft's subscription-desktop hybrid application updated from the cloud may trigger wider Office 365 adoption in the enterprise, at least that's what the software giant is banking on with its new Office365 ProPlus offering.

Office 365--Microsoft's subscription-based productivity software--is slowly working its way into organizations around the world. Back in February 2012 about one in seven Microsoft enterprise customers were using some aspect of Office 365, according to the company.

This past February the figure was more like one in five. And the number of small and midsize business using Office 365 grew by 150 percent in the same period, Microsoft says. (The company hasn't revealed the actual numbers.)

It certainly represents progress for the subscription model and linking the provision of software to users rather than machines. But it's hardly a glowing endorsement: 20 percent of enterprise customers is not a huge proportion, and 150 percent growth of a small user base still only produces a small user base.

But the pace of Office 365 adoption is likely to increase over the coming year, due to a product repositioning exercise which increases the scope of products that fall under the Office 365 brand. Thanks to the launch of the Office 365 ProPlus packages in February, some office productivity applications like Word and Excel installed as client software on desktops and laptops will also be counted as Office 365 installations.

Office365 ProPlus offers full desktop versions of the standard office apps, with the major difference over products like Office 2010 and Office 2013 in that these Office365 ProPlus apps are updated regularly via the Internet. However, there are other differences: Office 365 ProPlus is a subscription-based offering, rather than Office 2013, which comes with a perpetual license for a single installation. And Office 365 ProPlus is linked to a user, who can install the Office applications on up to five devices.

But the key point is that rather than being a true cloud-based Office suite, Office 365 in its ProPlus incarnation is partly a client-based suite, with various cloud features such as frequent updating and storage also provided.

Why is Microsoft Offering Client-based Software With Cloud-based Updates?
So what's the reason for Microsoft offering client-based Office software with regular cloud-based updates? Why is client software coming under the Office365 cloud brand?

One reason is that despite the benefits of cloud-based software, it is simply not as convenient or fully featured as the conventional Office suite, according to Julia White, senior director of Microsoft's Office Division. "Some customers hated the trade-off," she says.

With ProPlus, customers can get the best of both worlds, she suggests. "Because Office 365 ProPlus calls home (for updates) it is always evergreen. You open your Office app and there are new capabilities. Before, you got three years' worth of Office innovation every three years. Now you get innovation in small bites."


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