Microsoft chops Office 365 enterprise prices by 20 percent

Microsoft chops Office 365 enterprise prices by 20 percent

Summary: Microsoft is trimming prices of the enterprise and academic SKUs of Office 365 effective immediately.

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Microsoft is cutting the prices of a number of its Office 365 enterprise and academic bundles, company officials announced on March 14.

The company is lowering, effective immediately, "most" of its Office 365 for enterprise plans by 20 percent, according to an Office 365 blog post. The changes are available for both new and renewing direct customers.

Here's a chart, courtesy of one of Microsoft's partners, that spells out the new pricing in a nice, understandable format. It looks like some prices were cut more than 20 percent; others were slightly less than 20 percent, based on this information:

Microsoft officials are attributing the cuts to economies of scale and skills among its datacenters, developers and support personnel.

On the academic front, Microsoft also is cutting the price of its "A2" service plan for faculty and staff. A2 -- which bundles the core Exchange SharePoint, Lync and Office Web Apps -- already is free for students. Microsoft plans to launch the "full" Office 365 for education service starting this summer, officials reiterated today.

Microsoft rolled out Office 365 in late June 2011. At that time, Microsoft announced a number of different plans at different price points. The core Office 365 offering includes Microsoft-hosted Exchange, SharePoint and Lync, supplemented by Webified versions of Word, Excel, PowerPoint and OneNote (known together as Office Web Apps). Office 365 E3 and E4 plan customers get local copies of Office 2010 Professional Plus included as part of their subscription fees. Other users have the option of adding subscriptions for Office 2010 Professional Plus to their plans.

After today's cuts, the new prices on Office 365's enterprise plans are:

  • E1: $8 per user per month
  • E2: $14 per user per month
  • E3: $20 per user per month
  • E4: $22 per user per month

P1, the small business plan, is still $6 per user per month. Kiosk worker plans (K plans) also were cut by 20 percent.

Microsoft officials have said the vast majority -- 90 percent or so -- of early Office 365 sales were to small businesses, which weren't really well served by Office 365's predecessor, Business Productivity Online Suite (BPOS). Officials have denied that Office 365 failing to gain traction with enterprise users, who are the focus of today's price cuts.

As of September 2011, Microsoft is believed to have 5 million seats signed up for Office 365. Company officials haven't released any updated sales figures for the product since then.

Topics: Software, Collaboration, Microsoft

About

Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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35 comments
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  • Azure+O365=Awesome. Nice move to pass the savings on MS

    Shows what all companies can look forward to when they start hosting on Azure instead of brain dead iaas pseudo clouds.
    Johnny Vegas
    • Azure and O365

      Hi. Actually, O365 is not (yet) hosted on Azure. It runs in MS datacenters but not on MS' public cloud platform. The O365 team has said that is the ultimate goal, but don't have a timeframe to offer as to when it might happen. Thanks. MJ
      Mary Jo Foley
      • Mary Jo what is the likely impact on revenue taking a 20% haircut?

        I'd assume MS is predicting subscriber growth, but a 20% price cut alone is unlikely to change many minds.

        The falling prices must at some point hit revenue when demand for their products has been stagnant for some time.
        Richard Flude
  • why 20% ???

    why 20% ???
    i used : http://www.it4iran.com/it/?p=820
    our product : http://www.game4iran.com/game/?p=364
    and : http://www.game4iran.com/game/?p=348
    video 1 : http://www.it4iran.com/it/?page_id=242
    video 2 : http://www.game4iran.com/game/?page_id=236
    farshad_xix
  • small business..

    I am a P1 (the small business plan) user, and its the best available in the market for that money.
    owllnet
    • Please expand

      What do you like about the service? What competing solutions did you look at? Why were they rejected?
      Richard Flude
    • Small Business Web hosting w/multiple email accounts

      Sadly, Microsoft no longer offers any viable options (that I could find) for SBs that need only website hosting with 3-5 email accounts (not aliases). For one business wanting 3 email accounts (not aliases), Microsoft's best price is $216 per year.

      I don't want to have to leave Microsoft as my web host and email provider (OLSB), and it's also a small hassle to move from one provider to another. But with 365, the SB option for web host/email is not what we hoped.
      Force
      • Office 365 pricing

        For 5 user accounts Cost is $40 a month. For that price, You get
        exchange 2010, Spam Filtering, 25 gig mailbox, Support for mobile devices, and more. If you paid for just a good spam filtering service it would cost you about the same per month.
        Plus you do not have to pay for local storage. I'm suggesting small businesses moved to SBS essentials with office 365. It is most certainly a cost savings for them.
        michael.patrick@...
  • Office 365

    Mary Jo, thank you for such a succinct explanation of these price cuts! That table is absolutely perfect!

    I'd like to supplement this great article by touting my organization's value-add when it comes to Office 365. We offer 24/7 support to admins [u] and [/u] end-users, provide a customized migration plan, will conduct the migration for you for a flat fee and have been ranked as one of Microsoft's top cloud partners. We are En Pointe Technologies, and for whatever need you may have in regards to Office 365 - please e-mail me at rparpia@enpointe.com. We are the [b] only [/b] company in the industry with a team solely dedicated to Office 365.
    rzp-8891
    • What the?

      That dedicated team must not be busy adding value if you are having to spam blogs. It's certainly not adding value to this discussion
      B.A.
      • What's wrong with some marketing?

        Well B.A., I see a lot of misinformation out there in regards to Office 365 - which is really unfortunate because it is an amazing solution for SMBs as well as those in the Enterprise space. If I can assuage some of these concerns while expounding on some of Office 365's most fervent criticisms, then I won't feel bad about doing so!

        You say I spam blogs, but on a weekly basis our organization helps bring companies - from 5 seats to 40,000 seats - to more advanced e-mail solutions, greater productivity levels, and lower annual IT costs through Office 365 - and all the while also letting their IT Managers/Directors sleep a bit easier at night knowing that despite embracing what some call "cutting-edge technology" they have a dedicated support team at their disposal 24/7 in case something were to go wrong.

        As someone who is on calls all day, talking to individuals about the cloud specifically in regards to Office 365, what they seem to know about it, or lack thereof, boggles my mind. Despite my salesman pitch beforehand (which as I reread, does sound a bit douchey - I wanted to keep it short) realize that my only goal is to squash inaccurate concerns people have about Office 365 while delivering our services on a silver platter.

        Oh and for those below in this thread who says Google Apps for Businesses far outweighs Office 365 (e-mail wise). Let me ask you one thing: when have you ever seen a one-size-fits-all IT environment within an enterprise? According to Google, with their flat rate of $50/user/year...every user in an Enterprise environment requires similar capabilities. WRONG. Office 365, with its customizable features and Standalone SKU offerings, is a much more complex product, and thus will come with slightly less ease-of-use (from an administrative standpoint) than Google. That's a fact. So just realize that when you're purchasing (or even making the comparison on this blog) of Office 365 Enterprise and Google Apps.

        And if you don't like Google Apps...where do you go? Back to an on-premise Google server? Oh wait...at that point you've already sunk in a boatlod of money just making the transition from Exchange to Google (Google's migratory app costs about $20/mailbox to do so). Microsoft has been in the Enterprise space for who knows how many years, and while they may pull some sheisty moves...it's up to you (and Microsoft's partners) to swoop in and take that burden off of your shoulders. Which, I'll reiterate, is exactly what my company does.
        rzp-8891
    • Also

      You're not the only company in the industry with a team solely dedicated to O365.
      Andy Blevins
  • Hmmm, 20% cut now, so what do they plan to get in the long run,

    if their gambit ultimately succeeds?
    HypnoToad72
  • Still not happy....

    with the exchange rate.

    The Canadian and US dollars differ by less than a penny. Yet Canada still pays 15-20% more! WHY?!
    Joe_Raby
  • Don't see the discount

    I admin our E1 plan and it still says $10 per user per month... when will we see the changes?!!
    tdan76
    • Read the "fine-print"

      Hello tdan, please read the fine print. Its for "renewing" and "new" customers. If you intend to "renew" next month, the new prices would show-up. If you are not renewing, you are still struck with old prices, till you renew....ha.. ha :-) :-)
      ragz_jee
  • The real game-changer...

    ...is the change from $2.50 to $0.20 per gigabyte for hosted Sharepoint. We can get rid of on-premises servers at that price point.
    lucas_williams
  • Cloud Computing is still a Risky Venture...

    I KNOW (from first-hand experience with my OWN, consumer-based, high-speed cable modem service), that access to "the cloud" at high data rates IS reliable MOST of the time. But I continue to submit that MOST of the time JUST doesn't get it. We dodged A BIG BULLET just a week ago when a major solar flare SHOULD HAVE had major impacts on satellite communications, which quite likely could have also impacted much of the web, as well. And there are just SO MANY situations that can arise -- for whatever reasons -- just when anyone from a single-user, to small business, to major company TRULY NEEDS its software the MOST that "the cloud" (or their particular piece of the cloud) could suddenly become inaccessable.

    I pay most of my monthly bills online. Around the first of February, for reasons I still don't know, my cable modem service slowed to a virtual standstill (almost as slow as dialup, from what's supposed to be 30 Mbps). I was still able to access MOST of my bill payment sites, but ONE, which is all fancy, with too much art and whatnot on it, would not load, and I ended up with a $25 LATE PAYMENT fee for February due to that! I can't IMAGINE being in the situation of having SOFTWARE I depend upon HOSTED online and suddenly having my 30 Mbps service slow to 160 kbps for three weeks, like it did then, and be on deadline for something -- even were it for only a few hours... What if a cable's down somewhere -- or a major server?

    Having ALL your software ON your own system and drives (preferably SSDs for ONLY the OS and software, as I do), is the ONLY WAY TO GO, I think. If big businesses are doing this "cloud thing," I can't imagine they're doing it with ALL their stations. They MUST have some reserved with ONLY on-site software. If not, I think they're trusting that "the sky NEVER falls." In fact, the sky CAN fall -- especially if it's "the cloud."
    Jeff Hayes
    Jeff Hayes
    • WHAT'S WITH THE EXCESSIVE CAPS?!?!?

      Seriously, it just makes you sound like you're ranting. I switched off after the first paragraph, which is a shame, because I when I came back 10 minutes later, I re-read a bit more and you made some valid points. Just saying.
      mountjl
    • Cloud isn't a new thing??

      For someone that has a very clear view of Cloud aren't you missing something? Cloud has been around for many many years and has already changed the world for the better in my opinion, you mention a $25 late payment fee due to the slowing of your internet traffic and the dodging of major solar flares, you could have quite easily made a trip to the bank and made your bill payments across the counter but guess what your bank would have still relied on networks that would have been affected by a solar flare of any significant size and what makes you think your stand alone system and drives you have would have been any safer from a solar flare? Any system would be vulnerable to a significant major event like solar flares but with resiliency built in across multiple global datacentres with Cloud, in my opinion Cloud solutions will always be safer and more resilient than any stand alone system.
      chambd