Office 365 turns one, but success is tough to tally

Beware of misleading numbers, says one analyst; look at Office Web Apps' progress, argues another

1 2 Page 2
Page 2 of 2

From his perspective, the Office Web Apps, which were updated and improved numerous times last year and through the first month of 2014, were indicative of Office 365's success. That's because, if nothing else, that pace of change would have been impossible without a shift away from the deliberate three-year development cycle and toward a more frequent, if not constant, tempo.

"The company isn't monolithic in its product groups," said Miller, who like most at Directions, once worked at Microsoft. "The Office Web Apps group made a conscious decision to iterate in a velocity impossible before. I think it's really important to understand what the Office Web Apps, in particular, have done. They've released apps for iOS and Android around Office 365, [which before Office 365] would have taken three or four years."

In mid-2013, Microsoft did, as Miller noted, ship Office apps for Android and iPhone, making them available only to subscribers of Office 365. The company, however, has not released Office apps suitable for Apple's iPad, an omission that many analysts have criticized.

Miller also argued that while the revamped Office 365 is now a year old, it may still have its best days ahead of it, as larger organizations have yet to discard their on-premises back-end servers for Exchange, SharePoint, Lync and other services tied to Office.

"We're seeing the same thing as with Azure," Miller said, referring to Microsoft's cloud-computing platform. "For a bigger organization to take advantage of Office 365 is very complicated. They've invested in Exchange, SharePoint and Lync, and there's lot of heavy lifting to change. Many are still taking a wait-and-see position. And the revelations about the NSA [haven't helped anyone."

Microsoft did not recognize the one-year anniversary of Office 365 Wednesday, perhaps not surprising since it's been relatively low key about the subscription program's progress all along.

And the rent-not-buy model now faces its toughest test, said Miller. "The big metric will be the churn rate," he said, referring to how many new customers come in, how many existing ones leave or re-subscribe.

Whether Microsoft reveals the churn rate, or even hints at it in future disclosures of subscriber counts for Office 365, is another matter.

Webster, of IDC, believed that the lack of hard information on Office 365 for enterprises was due to the muddled origin of those subscriptions, with some coming from migrations from earlier programs -- she mentioned "BPOS," or Business Productivity Online Suite," several times -- some from companies switching simply from perpetual to subscription licensing, and the like.

Miller agreed up to a point, but added that the opaqueness of Office 365's performance was also likely due to Microsoft not having a compelling story to tell.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at  @gkeizer, on Google+ or subscribe to Gregg's RSS feed . His email address is

See more by Gregg Keizer on

Copyright © 2014 IDG Communications, Inc.

1 2 Page 2
Page 2 of 2
7 inconvenient truths about the hybrid work trend
Shop Tech Products at Amazon