Microsoft does not succeed as expected in enterprise: Lowering prices on cloud solution!


In a recent blog entry Kirk Koenigsbauer from Microsoft wrote that the company will be lowering their prices on most of their Office 365 for Enterprise up to 20 % immediately. 

Normally lowering their prices is a signal that a company either has problems getting into the market or that the competition is too rough. In this case it could be both. Microsoft meets heavly face wind from both Google and IBM. Both these giants in software and online services offers very competitive solutions to both lower and higher segments in the market.

The thing with Microsoft is that they already have a gigantic installed base on their Office platform and their customers do not see what a cloud solution could offer them that they don’t already have. It is a known fact that if you want full functionality of your Microsoft cloud solutions you still have to install software on your PC – AND – have licences for both.

Not enough business value

Lowering the prices means the customer do not find enough business value to defend the cost. According to ZDNet Microsoft official has been defensive towards the enterprise market. They have not succeded in gaining traction among enterprise users. More than 90 % of their cloud customers comes from small businesses.

The Microsoft Office 365 E1 Plan is now lowered from 10 USD to 8 USD and includes access to Exchange Online, SharePoint Online and Lync Online. Desktop clients has to be bought separately.

The Microsoft Office 365 E3 Plan is now lowered from 24 USD to 20 USD and includes Office desktop clients to access Office 365 services, Web Apps and archiving.

Their penetration of the education market is also diappointing, so here Microsoft is now more or less giving their cloud solution away for free, seeding the market. Just like drug dealers do…

Still a vertical silo solution

One of the problems with Microsoft’s solutions is that it is still not a horisontal solution where all functionalities are seamlessly integrated with each other. They are still silos and unless you have the full desktop installed you still have to download and install a small desktop app to coordinate the login to these silos.

This is the opposite with IBM’s solution, IBM SmarterCloud for Social Business. Everything is integrated and cooperates seamlessly. All you need is a browser. And if you want a desktop solution for email – choose whatever client you want, Outlook, Thunderbird, Lotus Notes etc.

More for your money with IBM

If the customer choose IBM or Googles solutions they need nothing more than a browser, which also means a lower administration cost. IBM even deliver their solution with free Apps for iOs and Android and could be run on any OS or device. Besides, IBM gives each user 5 GB of file storage. That is 500 % more than Microsoft’s 1 GB.

What Microsofts cloud solution does very well is defending their installed base on the desktop, like making SharePoint “free of charge” with the Core CAL. But there is not such a thing like a free lunch. If you want full use and full functionality you have to buy the desktop licences too. Do not be fooled!

Read more on ZDNet!



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1 reply

  1. I agree with some of what you say, but lowering price has always been and will always be a Microsoft tactic. For any large corporate customers they tend to give away the product and migration support for next to nothing anyways. Small business is an easy sell for cloud computing which have always been looking for cheap hosting solutions. Microsoft, IBM and Google all have large corporate customers so this is inaccurate. The battle over cloud dominance is really just getting started as the offerings from all three big players have matured in the last 2 years. If I were a small business under 200 employees I would go with Google in a heartbeat. Cheaper and the possibility of hooking apps onto Android is a no-brainer.

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