Opinion: Office 365, Microsoft's Cloud-based future, and why Google should be worried...

Newly-appointed Microsoft CEO, Satya Nadella, took the stage yesterday in his first public press conference to unveil the long-anticipated Office suite for Apple's iPad. 

Whilst instantaneously rejoiced by many long-term users of Office in homes, schools, and enterprises worldwide - many also asked the question whether it was too late for Microsoft to position itself as a competitor to Google's free web-based suite... 

In a matter of hours Microsoft stole the top three "free" apps on Apple's AppStore - showing one of the company's traditional sources of revenue may still have the industry clout to remain a key player despite the software's £79.99/year ($99.99/year) price tag.

Of course Microsoft's suite has several advantages over Google's:

  1. It's recognisable. - Anyone who's been to work or school is almost certain to be familiar with how to use Microsoft Office.
  2. It's compatible. - Many documents received will be in a Microsoft Office format. Other suites do a decent job in converting these formats but not always to complete success. 
  3. It's integrated. - Windows makes up 81.29% of the worldwide market share (according to NetMarketShare) and, if/when those users upgrade to the latest version of the popular OS, all documents created can be stored in OneDrive and accessed anywhere. 
  4. It's more powerful. - Google's office suite may be enhancing at a rapid-rate but there are still many features missing when compared to Microsoft's Office. 

Whilst we know from the chart-topping success that downloads of Microsoft's iPad apps are popular -- we don't have any figures about how many have become paid subscribers to Office 365 since the iPad release.

Microsoft revealed back in October that more than 2 million people had subscribed to the service. In the five months since, it added an additional 1.5 million subscribers. This brought the total number of Office 365 subscribers to 3.5 million - representing a commendable 75% growth.

The iPad apps can only view documents without a subscription; whilst the iPhone / Android / Windows Phone apps can both view and edit. Neither mobile options can view or edit offline without a subscription.

Currently I'm writing this article on Word Online to gather my own thoughts as to whether I can justify dropping £79.99 on a subscription. Right now, I can't. For my uses, Google offers the same but with free offline access. 

Microsoft Office continues to be a fantastic app and the company deserves to sell subscriptions and continue profiting from a traditional driver of revenue. But unless Bing takes off as a serious competitor to Google's advertising business -- it just can't beat Google's free price-tag.

… But what if Bing can become a competitor?

People are quick to call Bing a failure - which just for 'Satori' is false (see our interview with Microsoft's Anand Krishnan) - but in a single rumoured move Microsoft can turn the search engine into a force to be reckoned with... 

A free, Bing-supported version of Windows could not only be appealing to customers -- but also IT departments looking to upgrade their nearly extinct Windows XP machines in a cost-effective manner. Let's not forget Microsoft has recently added a "boot to desktop" option for those who want familiarity and still receive the speed and security improvements found in Windows 8... 

Windows XP currently has a market-share of 29.53% whilst Windows 7 has a market-share of 47.31%… Combine those and that's a potential 76.84% which could be running the latest version, for free, supported by Bing ads.

This would provide a huge opportunity for advertisers to reach targeted audiences not just at an app or web-level... but at an OS-level. Users could "opt-in" to have their usage tracked so ads can be targeted not just based on what they browse to (á la Google) but also on what apps / games they use...

... As for the benefits to the end-consumer? They get more apps / services for free.

We're thinking long-term here, but can you imagine the impact that would have on Google? The company's ad revenue could drop significantly and force services currently offered for free to become paid. People, like me, will then see Microsoft's services like Office to be the best value for money...

Microsoft's new CEO, Satya Nadella, has been at the company for a long-time with his main expertise being in the Cloud. He knows the future is online - it's what has driven Google's incredible rise - and he's quickly making steps to move the traditionally offline software company being called as a "dinosaur" into the modern era... 

With Office 365 we're seeing this movement, we're seeing its potential with the company's Xbox games console, and at BUILD next week you can expect more... Microsoft is finally online.

What do you think about Office 365 and Microsoft's Cloud strategy?

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