IHS Global Insight Perspective | |
Significance | Office 365 is Microsoft's newest cloud service, bringing its main products together for business customers. |
Implications | Cloud services are becoming increasingly important as customers want to be able to access their data anywhere at any time. |
Outlook | This continues Microsoft's recent aggressive strategy against both Apple and Google. |
Microsoft has launched Office 365, bringing its main products together into the cloud. The service is available globally in 40 markets and includes Microsoft Office (Word, PowerPoint, Excel, OneNote and Outlook), SharePoint, Exchange and Lync for a monthly subscription to business customers, with pricing starting at USD10 per month. The beta trial was successful, with over 200,000 organisations signing up and IT costs reductions of up to 50%. The service has also been adopted by major telecoms providers, with up to 20 groups, including Bell Canada, KPN, France Telecom-Orange, NTT, Starhub, Telefónica, TeliaSonera, Telmex, Telstra and Vodafone, aiming to bring Office 365 to their customers this year.
Outlook and Implications
- The Cloud: The new service reinforces the importance of the cloud in the telecoms space as many operators and vendors have recently announced either new services or further investments into the segment. Apple was the most recent with the launch of iCloud, targeted specifically at retail customers, which followed similar announcements by Google and Amazon. Other companies, such as Telefónica, Cisco, Verizon and AT&T, have recently announced a further focus on the segment, either through acquisitions or the launch of new services. The cloud is of particular importance for all of these companies as this moves data from the physical restrictions of a PC to a data centre from which a customer can access files on any device and at any time. With smartphones becoming more sophisticated and tablets entering the business segment, more customers are looking to access their data from any of these devices as opposed to just being able to do so with their laptops or by using their own networks. This is why small- and medium-sized businesses are a particular focus for Microsoft as they are more likely to use cloud-based services as a way to work anywhere, as well as to cut costs.
- Microsoft's Continuing Aggressive Strategy: The launch of Office 365 continues Microsoft’s recent aggressive strategy, highlighted by its partnership with Nokia on the Windows Phone 7 operating system platform and its acquisition of Skype. Microsoft’s aim is to compete with Apple and Google, which have both recently launched cloud services, although with different focuses. While Apple focuses more on the retail sector with its cloud offer—something Microsoft will probably look into in the future—Office 365 is a clear competitor to Google Apps, which has had some success in the small and medium enterprises segment thanks to its ease of use and cheaper price than Office. As such, it is no surprise that Google’s reaction has been to ask its customers to list 365 reasons to prefer its own service, a clear marketing ploy against Microsoft.
- Further Integration with Mobile Strategy a Clear Focus: Microsoft will probably follow up by putting further products into the cloud and integrating other parts of its business with Office 365. A clear example is Skype, which will likely be introduced into Microsoft Office as a video-conferencing tool and as such into the cloud, thus enabling Microsoft to compete with Cisco and offer video services. However, it is integration with Windows Phone 7 that could be the key driver for Microsoft, especially with the Mango update that integrates different Windows services into the mobile operating system. Microsoft will be looking to integrate all of its different services onto different platforms, with the recent announcement of Windows 8 enabling it to offer its own system for smartphones, tablets and PCs, and making integration easier between the different devices. Furthermore, Microsoft will hope the integration of its software on different devices will give it an edge over competitors, not only within the enterprise segment but also with retail customers, and hopes the success it has found so far with operators with Office 365 will be replicated with other products as it looks to regain its market leadership.
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