I attended the Microsoft Partner Conference last month in Los Angeles, CA, and there were two major topics during the week. The first was the recent release of Office 365 which is the epicenter of Microsoft’s cloud computing vision. The second was which Hollywood stars we would see, obviously. However, the only star I saw was an Allison Iraheta performance that Microsoft sponsored at the Staples Center. (Allison, if you were unaware, came in 4th place on Season 8 of American Idol. Apparently Danny Gokey, the 3rd place winner, was unavailable.) Anyway back to Office 365. Microsoft is never one to sit on its hands and allow others to dictate technology (with the exception of Zune, the wannabe iPod…okay there is probably more) so they put forth the full effort to come up with their own subscription-based licensing model to extend their platform into the cloud and compete with the likes of Google Office, and they were happy to talk about it. Say what you want about Microsoft and their cloud initiative, but at least they’re trying. Their message was that they were reading the tea leaves and seeing where their direction of office computing and email could be going so they also had to act. Even though Office 365 is theoretically a cheaper product to purchase than Office Pro Plus and Exchange, one would think that by pushing Office 365 Microsoft would be kicking itself with a potential loss of revenue. That’s still to be determined, but I believe Microsoft would take the lack of revenue over no revenue at all. The one thing they don’t want is to be left behind, and they used a great example of another industry where that happened by comparing Netflix to Blockbuster and how it relates to Microsoft’s cloud technology. I think everyone can agree that Netflix is innovative in its approach to get its product out to consumers. They realized that there was an alternative way to renting movies other than the normal process of going to your local video store and checking out Goonies for 5 days. We all know their story and the success that it’s brought. Netflix realized they had to be different and creative and provide a product in an alternative manor by sending the movie to the consumer, rather than the consumer going to get the movie. Netflix continues to be innovative by allowing their consumers now to stream movies, although the recent price increase to do that is a sore subject for movie enthusiast, but I digress.
What Netflix did was different, and a lot people bought into it, some earlier than others and now the Netflix model is perhaps the best way to obtain a movie. Their competitors may have thought it was a fad and stood pat with their own model and didn’t diversify to compete with the new trends. Maybe they relied too much on the success of their name brand. Maybe they thought their conventional way of doing business would be enough. What ever happened to Blockbuster? They are not around anymore because they kept business as usual and when they finally decided to diversify into mailing movies, they were too late to the game. Microsoft doesn’t want to be Blockbuster.
Microsoft is jumping in with two feet by offering an alternative way to purchase Office, Exchange, SharePoint and Lync. Will this be the new way to purchase software, like Netflix was the new way to rent movies? The question is, what will come of Office 365, where is it a fit? Do you foresee your organization going via the subscription model route and taking products off premise? The decision to take Office, Exchange, SharePoint and Lync off premise is a delicate conversation for a lot of customers. In some ways it’s a new concept to grasp. But is it? Do you still watch DVDs off your DVD player at home or do you stream them? Is streaming the direction we’re going?
The questions a lot of customers are asking in regards to Office 365 are how does it work, will it work, and when do I decide to take the plunge (if I decide at all)? Let’s say you’re a small organization looking to implement Exchange, I bet now you have to decide whether to purchase the HW infrastructure, SW licensing and time to put it all in house, or do you leave it off premise and pay a monthly fee for a service. Or, you’re an organization running an older version of Exchange and you’re looking to migrate that to Exchange 2010. Do you purchase all new licensing or do you look to move that technology to the cloud? It really becomes both a technology conversation as well as economic conversation.
By moving this technology to the cloud, organizations can play in a different budget bucket by considering Office 365 as an operation expense vs. a capital expense. It’s a conversation I think a lot of people are having, but will they be acting on it today or tomorrow or not at all? Microsoft will still continue to offer their product on premise through their volume licensing programs, like Netflix offering DVDs and Blue-rays, but by offering Office 365 as another way to use their software, they are providing an alternative way to use their products. Time will tell if it takes off…into the cloud that is! What are your thoughts on Office 365?
