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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.)
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...
*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?
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.
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.
... the adequacy of old perpetually licensed versions ... the preference against paying annually for software licenses
> 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
>"Excel is unique and there's not really a replacement for it."
And, yet, for what perhaps 90% of people use spreadsheets for, the alternatives work just fine (depends of type of user and industry, of course). I know, because I have 150 business users that use LibreOffice and zero using MS-Office. Maybe a few times a year we face an issue, and it is not because LO lacks some feature of MS-Office or Excel, but because some Excel spreadsheet we were sent is using some obscure macros, or an MS-Word document had horribly poor formatting. And then, it just requires someone to work on it a bit to fix it.
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?
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.
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.