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Microsoft to Sell Outlook Subscription Service
An anonymous contributor writes "Boston.com is reporting that Microsoft will begin selling Outlook as a subscription service to compete with add-on services provided by Yahoo and Google. 'The new service, which costs $59.95 per year, will let people organize e-mail, contact lists and calendars in their online Hotmail accounts using the Microsoft Outlook program most often found on businesses' desktop computers.' I can't see many users paying for this service. Most Hotmail users use it because it is free, or they don't know about the alternatives. Paying for access via Outlook doesn't seem to fit with that market segment."
TFA Article Says:
Microsoft is smart to take advantage of a popular core product -- Outlook -- to help make Hotmail more attractive to sophisticated users.
They're not targeting fungrl149@hotmail.com here. They're targeting the exact segment of the market that Gmail appeals to now. Gmail took free web mail and turned it into a legitimate and attractive service. MS would now like to up the ante a bit and charge a little (and the dude said the price was 'steep', so it'll probably come down before launch) and provide more feature richness for that money. It's just another step towards the increasing legitimacy and acceptance of online services either replacing or merging with traditional desktop applications. I'm no fan of MS, but their participation in the advancement of web based email services or other apps is part and parcel of the general move forward.
I Want To Believe
ISP's don't provide 250Mb of email, and if you change ISP's you lose your email address. That's one of the benefits of a "hotmail" is that you're not locked to a certain ISP. I Know people that have stayed with dialup simply because they didn't want to go through the process of changing their email.
If Evolution/Open-Xchange can import all Outlook data, this is a great opportunity for Microsoft to educate their Hotmail customers on the benefits of switching, then steal them for the superior Evolution/Open-Xchange platform. Especially when Evolution runs on Windows, too, and we can host Open-Xchange on Linux. The PIM server biz will explode in the coming few years, especially when others follow Palm's lead in including "MS-Exchange" sync with their mobile "phone" PIM SW.
The key obstacle, as usual, is MS-proprietary data formats and protocols. The MS-Ex sync protocol is available for licensing. And PIM data uses standard vCal and VCard data, though there are MS-proprietary formats, too. Our Open community can pull this off with many people each doing our small part to reengineer those formats, and get Evolution/Open-Xchange to seamlessly import the native MS formats. MS is blinking - let's hit 'em between the eyes!
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make install -not war
When I first read this article I saw this as a really stupid decision by Microsoft. It didn't seem to make any business sense at all. Then I saw it for what it really is. It's phase one in Microsoft's overall strategy to turn Office into a subscription service.
Little by little, piece by piece, you'll see various Office applications offered as a service, with the ultimate goal of making users pay the Microsoft tax once a year.
Gates isn't an idiot. He's seeing the ever increasing upgrade cycle. Let's face the facts, Office 2003 offers very few new useful features to your typical Office user than was there in Office 2000. Some would argue that all the way back to Office 98. He would love to get users into a subscription model. If you don't pay the yearly tax, your cut off, just like that.
Do businesses really rely on free web based email for communication? I've never worked for an IT company that had less than 100 employees so maybe I'm missing something here. Would small businesses really use communication systems that are outside their control (or through a pay service that provides corporate like email solutions) or ones that really don't have an obligation to protect their sensitive business data? I don't think I'd rely on Hotmail, Yahoo, etc... for anything beyond personal email. Just seems like too much of a risk.
folders are limiting, whereas labels are not. gmail is converting mail to the new paradigm, rather than the quagmire it's been stuck in for 20+ years.
No it's not, the replacement of static folders with more flexible labels does not change the basic model of email. There's no doubting it's a cool feature, but it's very much evolutionary rather than revolutionary.
The only paradigm that's been shifted by GMail is that marketeers now have direct access to their potential customers' emails and so have an unprecedented window in to the mind of their market.
Gates isn't an idiot. He's seeing the ever increasing upgrade cycle. Let's face the facts, Office 2003 offers very few new useful features to your typical Office user than was there in Office 2000. Some would argue that all the way back to Office 98. He would love to get users into a subscription model. If you don't pay the yearly tax, your cut off, just like that.
Yup. It used to be that you had to innovate if you wanted customers to trade in the old one and buy a new one. But that's too much work. I'm sure companies would like to do nothing else but sit there and get paid, and by adopting these new strategies, they can do just that. There will be no more using Office 2000 for 5 years because it's good enough. Now you'll have to give them your money every year, whether you want the new features or not.
I'm sure other companies will join the new model, and you won't be able to actually "own" anything anymore. Open source throws a wrench into those plans though. (so it must be outlawed!)
With Microsoft Exchange becoming less favored in many corporate datacenters, and the threat of open source PIMs coming to Windows, like Evolution or Chandler, this change has the appearance of Microsoft making an effort to convince people to use servers they control to store PIM data and messages.
This gives Microsoft an excellent lock-in strategy, further down the road -- not only would you have to change email addresses to change clients, you would have to rebuild your contact database, transfer your calendar items, etc.
The only part that I find surprising, here, is that Microsoft would bother charging for the service. Why not make it free, then turn it to a pay service when they have properly locked up your data in their servers?
Weapons of Mass Analysis
Outsourced email is actually a pretty good business. To clarify, this is not funnyname@standard-addy.com, but full blown email using the company's domain name. From an outsider's point of view, there is no difference between outsourced service and a company housing their own mail server.
The beneits? Someone else takes care of the hardware, software licenses (if applicable), disk, backups, maintenance, and 24x7 availability. For a small company with no IT staff, this is great -- someone else manages the web site, someone else manages the mail server, and a local VAR with a maintenance contract comes by and takes care of the file/print server from time to time. A maintenance contract can be as little as a few hundred dollars a month which is substantially cheaper than keeping someone on staff. The backups get automated and the receptionist is told to swap tapes daily.
For a larger organization, the value can easily mean the savings of a headcount. The loaded cost of a moderate to strong IT staffer on the west coast is easily between $80-$100k/yr plus the hardware and software costs associated with the mail server itself. If you can outsource all of that for $30-$40k/yr to someone else, you've just saved a lot of money and headache.
This is no joke: most of the independent investment bankers and VC types I've been dealing with lately favor hotmail. No, they're not Sand Hill Road level ones, but they're out there funding companies and quite happy with Hotmail. I think there's probably a market for this anyway.
IMHO this is where MS would like to go. Having a hosted web service model gives a dependable revenue stream that makes the Wall Street analysts salivate. Knowing that you have X numbers of users paying Y amount/month is a reliable predictor of future revenue.
This also allows MS not to worry about license revenue and allows them to control the spitgot. If you can turn a service off or on then you put a serious clamp on the pirating of your software.
The company I work for is in the final stages of turning off the licensed customers. The code line is deadended and will be eliminated in the future years. The only way to get our service will be to pay a user fee for out hosted web service.
This is great for the company because we now control updates, releases, etc. and don't need the customers permission. We turn on access for new users and when the users get to a certain number we add a few more machines to the server farm. We use the same open source applications to provide the web servers and leverage the databases to handle many clients on the single license.
Over time we have seen the 'cost per transaction' reduce and the 'cost per deployment' reduce but we still charge the same amount. This increases the margins and thereby increases our profitability.
MS would love to get to the same place.