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Microsoft Reports New Subscribers For Office 365 Plunged 62% (itworld.com)
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.)
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.)
... smart devices and applications.
It little behooves the best of us to comment on the rest of us.
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...
When OneDrive was unlimited I was a subscribers. But they reduced it and now they've reduced it again to 1TB. Rather than deal with the few people (their words) that were seriously abusing the feature, they dicked over everyone.
*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?
The software business has become like a lot of others. There are constant tests to see how much abuse customers will accept.
With software, there are very complicated issues, such as the cost of training employees in a user interface. That lack of detailed technical knowledge of most customers makes it easier to abuse them.
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.
Their anti-spam is decent and they let you host as many domains as you want on their DNS service (google for business limits you to 20 or so) and as many email aliases as you want in the same inbox. I have yet to find a more cost-effective way to deal with a large number of domains and email addresses.
Maybe my situation is unusual because I have tons of domains but to me it's totally worth it to pay a few dollars per month for email and DNS hosting, I don't want to deal with maintenance and support myself.
Their web office suite sucks though, including outlook.
lucm, indeed.
Typing letters, doing a spreadsheet, desktop publishing is not the unique, selling point, must have product that has to work between management and staff.
Past optimisations between Windows, a CPU and a spreadsheet application helped with GUI and responsiveness due to less RAM, slow CPU's and desktop computer design compromises.
Commercial/gov users have their software paid in full, home users now have fast hardware and other great software options.
Home users want to get as far away from boring and expensive work applications as possible.
Other apps, quality non rental software, free software, open source can offer text and spreadsheet support.
The GUI is simple, support works, the app is fun for what it offers.
Microsoft is great for games, GPU's. The complex, boring work like Office GUI is not needed at home for or users.
Better supported apps exist for the average user doing simple, average computing tasks.
The early 1980's and 1990's rush to use, understand and study Microsoft application at home to be a better worker is over.
Domestic spying is now "Benign Information Gathering"
As if any company would change their policies after a few days of downtime.
Many companies run their business on Outlook, Word, and Excel, which is why you see it installed on almost every end-user system. Put another way, shut off the internet and see what happens to the ISP contract after "a few days of downtime".
We're getting our 50 users off it. With the non-stop "Service" messages and the intrusive bullshit it keeps trying to push it has turned into a sinkhole.
For example, Outlook users get prompted to install a NFL calendar add-on to follow football season. When I called support they first told me it must be a malware we picked up somewhere. After getting even more irate they told me "oh, well, yes, we do push that and you can't turn those messages off".
Utter bullshit.
> Microsoft STILL hasn't figured out that most people prefer to own something than rent something.
For many years, I sold some software to small businesses (people smart enough to successfully run their own business). We sold the software for $149 or $189. Our competitor rented theirs for $59/month. This is software that businesses would use for years, so the comparison was:
$149 to buy it and use it for three years
$2,124 to rent it for three years
We had MANY potential customers choose the "cheaper" competitor even though we loudly explained the huge price difference on our web site amd anywhere pricing was mentioned. Potential customers asked us for a monthly option. Eventually we relented and offered the choice, while clearly telling new customers that buying costs a whole lot less. A lot of people chose the monthly option.
Once in a while, when I noticed somebody had been paying for four years or something, meaning they had paid five or ten times the purchase price, I just cancelled their billing.
I wonder how many of these "subscriptions" are effectively free, given away by MS to students because their educational institute has a licence, and its not just the student , its staff as well who are able to get a free subscription and install it on 5 machines they own. I think there is a VERY big gap between total number of subscription and ones that Microsoft actually make any income from.
I GLADLY pay 9 bucks a month for photoshop/LR All updates come automatically, never had a problem with it, and they usually come up with a new version every year on the old stand alone model, and the update was more expensive than the subscription.
Here's an investor presentation from last week (PDF). It's a long document, but the following is mostly derived from a couple of slides at the bottom of page 3.
It looks like their total revenues for Creative Cloud dipped a few percent and then recovered again over the period 2012-2015, and as of 2016 their annual recurring revenue for that area is up to around $3.5B, compared to annual revenue of around $2.5B back in 2012 when their subscription model was starting up.
Over the same four-year window, it appears that their subscription ARR has been increasing roughly linearly, while their non-subscription revenues are fast approaching zero.
In short, it looks like they are now better off than they were four years ago in terms of annual Creative Cloud revenue, by about 40% if they maintain their current subscription level.
Another figure they mention is current year-on-year subscription growth of 46% outside the US. However, they are deafeningly quiet on what proportion of their overall market that represents or the equivalent figure for US customers. Their overall growth rate is clearly far less than that, so it could be that they're successfully expanding into foreign markets and that's helping to drive their overall subscription growth (probably a good thing for Adobe) but it could also be that sales in foreign markets are covering up a significant reduction in the US as increasing numbers of US customers are cancelling their subscriptions (probably a bad thing for Adobe).
It's also difficult to tell how many subscribers they actually have, since there doesn't seem to be any breakdown of which of the available subscription plans are generating how much revenue or what sort of effects they see from volume licensing, subscribers from different countries, or subscribers paying in different currencies. If we guess an average subscriber is worth about US$500 per year to them in revenues, that would give them around 7 million current subscribers, but this could obviously be way off if say most of the revenues are actually from enterprise customers paying far less than the headline per-seat prices with their volume deals.
If you disagree, post your argument. (-1, Overrated) isn't your personal censorship tool for views you don't like.
As someone in Seattle that has suffered at least two-thousand days of downltime with our Internet access, you are wrong.
If you would just lay off the expresso a bit then two hours won't seem quite that long a period of time.
Faster! Faster! Faster would be better!
I work for a contractor inside Microsoft buildings, and they tell us to not access the Internet at work or from home.
If you are using Microsoft products, that is good advice.
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.
I install old versions of MS Office on my computers. Some versions are VERY old but each "new and improved" version seems to be less user friendly and over-complicated.
I despise the crowded "ribbon" for Word and Excel. Pure crap.
And MS-Office fiddling with UI constantly, with the ribbon interface, then menu items rearranging themselves based on use etc confused lots of users of advanced features.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
2,000 days of downtime? Maybe you don't actually *have* internet service. Say, did a guy come around and sell you a cardboard box with the word In-tar-net written on it in crayon?
... if I ever needed ultimate MS Office compatibility, I'd probably re-install an older copy of MS Office I have, However, at this point, LibreOffice opens and works well with the MS Office file that friends and colleagues send to me. So why should I pay $7 per month for the cloud version of MS Office when the free-as-in-beer LibreOffice works for me. I'd rather use that $7 per month for Netflix streaming....
it doesn't really bother me. I use the built-in MFA in Office 365 and it's decent enough, but for like an extra $2 per month I could use the premium MFA available on Azure, it includes stuff like IP whitelisting. I looked into it but didn't decide yet if it's worth the hassle. Anyways I rotate admin addresses and passwords a lot.
For quite a while I was running my own setup. First on my own machines with a commercial ISP, then colocated, then on AWS, then on a bunch of cheap VPS all over US and Europe doing my own load-balancing and HA. I've tried security and antispam appliances, antispam cloud services, etc. But it was time-consuming, with all the work involved: monitoring, backup (data and config), patching, and all that. And whenever I looked at the logs it just freaked me out to see all those scanners and robots from China and eastern Europe trying to take control of my servers, I always ended up spending countless hours micromanaging firewall rules and ids/ips rules.
Now I buy my domains from AWS (privacy is included, which matters when you have a lot of domains), I host the bulk of my email and DNS on Office365 and some on Google For Business, and I typically use Sendgrid to send "official" emails (newsletters, invoices, password resets, etc). They can deal with Chinese hackers and manage blacklists and keep an eye on SSL exploits, I have other things to do.
lucm, indeed.
Shit doesn't improve with age.
love is just extroverted narcissism
Purchased software is indeed an asset. In the US, the expense is taken over three years. That is, if you spend $300 buying some software, you pretend that you spent $100/year for three years. This is because at the end of a year yes you already spent $300, but you still have software that's worth $200.
IRS Publication 946
You bring up some interesting points.
Some customers were very clear that they felt like $59/month was a better / lower price than $149 or $189 to purchase. It wasn't about support, it was purely short-term thinking in those cases.
Support costs became an issue for us, for the company, because we still had to provide some support for sales we had made years ago. The longer we stayed in business, the higher our costs went, even if sales didn't increase. We cured that with a two step solution. First, we began offering extended support for $99/year after the first year. The first year was included in the purchase price, after that it was optional. That gave out customers the freedom to make a one-time purchase, or to choose multi-year support, at their option. For us, it means today we're not responsible for providing support indefinitely in sales from five years ago. For a couple of months it was an opt-in option you could add, then we switched it to opt-out, with support included by default. Then we changed the language to call it "Standard: with support and Barebones: no support after 12 months".
As it turned out, with the extended support option, most of the people who demanded a lot of support were people who had chosen the discounted "no support" option. Customers got upset when we told them "you actively chose the unsupported version. Would you like to sign up for support now, 12 months for $99?" I'd prefer to give customers choices, but not if it makes them angry. We moved to $99 / year support as the only option and stopped offering a choice for only 12 months initial support.
If I ever do something like that again, an annual fee will be mandatory, unless it's a $1 app that obviously doesn't include much support.
Our school moved to Google Apps and Chrome OS about 3 years ago. Microsoft, at the time, did not have a comprehensive cloud/local strategy that could compete with the ease of use and cost (free) of Google Apps.
Recently Microsoft has started giving away Office 365 with a local installed copy of Office for education customers. That's nice, but we are very entrenched in the Google Apps/Chrome OS ecosystem - so switching back at this point would cause lots of pain for little benefit.
So in a period of 3 years we went from buying Office licenses for our all of our students and staff, to a totally free solution. I'm sure many other schools did the same.
So there are two things in play:
1) Cloud providers are a much more critical target. So risk is elevated by virtue of being so prominent and knowing that if you do finda hypervisor exploit, there is a target rich environment. In practice, this hasn't really been an issue, but should the day come when someone succeeds at scale, this will be catastrophic.
2) The way SMBs *use* cloud providers is a *huge* increase of risk. On an SMBs private network, it's generally a big hassle to get a system accessible from the internet, so they generally deploy stuff on unroutable addresses without any NAT rules to expose ports. In that context, when they do the lazy thing and have easy to guess passwords/irresponsibly default configuration, the risk is somewhat mitigated of it becoming an attack surface. Now they *shouldn't* do this, but this is the reality. With their cloud provider, it's generally easier to put it on the internet widely accessible than it is to tuck it away. The path of least resistance becomes easy to guess passwords and default configuration on a publicly accessible IP address.
Reference all the huge number of DB attacks where someone got into an admin portal of some instance. This is worse now than it used to be because of all the folks who shouldn't be deploying on internet addresses now doing so.
XML is like violence. If it doesn't solve the problem, use more.
He's in a building with 10,000 people in it. The internet was down for a couple of hours last June, so 2000 person-days of downtime.