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Microsoft Reports New Subscribers For Office 365 Plunged 62% (itworld.com)

Posted by EditorDavid on from the softening-software-markets dept.

An anonymous reader writes: Microsoft is having trouble selling $7-a-month subscriptions to Office 365. In the last three months of 2016, Microsoft added just 900,000 new subscriptions -- and throughout all of 2016, subscriptions increased by just 4.3 million. In fact, a chart at IT World shows that new subscriptions actually peaked in a year ago, with a steady decline in new subscribers ever since. "In each of the last three quarters, Office 365 grew by about 900,000 subscribers, the smallest quarterly increase since early 2014," they write. "Prior to the nine-month stretch of 2016, subscribers were accumulating at rates two to three times larger per quarter."
This explains why Microsoft announced 97 new markets for the software nine weeks ago. So far after four years, Microsoft's found just 25 million subscribers for Office 365 -- and it's not clear how many of those came from their $100 five-user packages. (Although those figures suggest that Office 365 subscriptions are still earning Microsoft at least half a billion dollars a year.)

9 of 353 comments (clear)

  1. Owning vs Renting by JustAnotherOldGuy · · Score: 5, Insightful

    Microsoft STILL hasn't figured out that most people prefer to own something than rent something.

    Their quest for the almighty "endless-subscription" cash-cow is failing.

    --
    Just cruising through this digital world at 33 1/3 rpm...
    1. Re:Owning vs Renting by JustAnotherOldGuy · · Score: 5, Insightful

      I wouldn't call 25 million subscribers "failing".

      Given their user base, I wouldn't call it "succeeding", either.

      --
      Just cruising through this digital world at 33 1/3 rpm...
    2. Re:Owning vs Renting by dgatwood · · Score: 5, Insightful

      Just a few years ago, the assumption was that pretty much every computer user either owned or pirated Office. There are 1.25 billion Windows users alone, not counting the Mac users, which adds probably another .1 billion or so. So Microsoft's market share went from 100% just a few years back to 1.8% under the rental model. That's not just failing; it's failing very, very badly.

      Now this didn't happen all at once, mind you. It all started more than a decade ago when Microsoft massively overcharged for the Mac version of their office suite, resulting in the nascent iWork suite getting a foothold and eventually becoming dominant in that market. From there, they ignored the threat posed by OpenOffice and continued their existing pricing. OO gradually chipped away at the perception that everybody had to own the real thing for interoperability. So when Google Docs arrived on the scene and made it possible for folks to do most of the basics without paying a dime, there was pretty much nothing Microsoft could do about it other than try desperately to milk what was left of their collapsing market for every penny they could squeeze out of them.

      The bad news for Microsoft is that no matter what they do, they're unlikely to increase revenue much beyond their current levels. For most people, the free solutions are good enough, and the people for whom that isn't true are mostly already paying them for it. If they raise prices, more customers will look for ways to get by with the free solutions, and they'll lose subscribers. If they lower prices, nobody will suddenly think to themselves, "For just another few bucks a month, I could have Office," because the existing free tools already meet their needs.

      At this point, it's pretty much downhill from here as the free solutions continue to improve and the reasons for paying Microsoft continue to diminish. IMO, this is what a company on life support looks like, and as Michael Dell once famously said about another beleaguered company, if I were the CEO, "I'd shut it down and give the money back to the shareholders." Just saying.

      --

      Check out my sci-fi/humor trilogy at PatriotsBooks.

  2. *new subscribers* by Anonymous Coward · · Score: 5, Insightful

    *new* subscribers. I can only be a new subscriber once...after that i'm an existing customer. duh.

    Once MS have 100% market share their new subscribers will fall to 0. Is this a bad metric?

  3. Too many choices are a barrier to adoption by garcia · · Score: 5, Insightful

    About a year ago, they changed their offering and split it into so many different plans no one knows exactly what you get.

    MSFT needs to immediately limit themselves to four plans:

    1. Student

    2. Entry-level

    3. Power

    4. Everything

    And they need to make it very clear what these mean, in a single page document which is the same regardless of where you find it on Microsoft's site.

  4. Re:The decline is due to ... by Anonymous Coward · · Score: 5, Insightful

    ... the adequacy of old perpetually licensed versions ... the preference against paying annually for software licenses

  5. Google Docs by ShanghaiBill · · Score: 5, Insightful

    Google Docs is another reason. Google Docs doesn't have all the features of MS Office, but it is "good enough" for most people. Instead of $7 per user per month, it is $0 per month. Google Docs also has less downtime.

    1. Re:Google Docs by ShanghaiBill · · Score: 5, Insightful

      Also, "cloud-based," was equivalent to "hackable."

      Google's datacenter is likely far less "hackable" than some small company's roll-yer-own solution.

  6. Re:The decline is due to ... by Tough+Love · · Score: 5, Insightful

    The preference for paying nothing at all...

    Libreoffice 100 million users, zero pirates

    --
    When all you have is a hammer, every problem starts to look like a thumb.