Office 365: Sorry, folks. This is not Office in the cloud

Office 365: Sorry, folks. This is not Office in the cloud

Summary: Microsoft's Office 365 announcement this week was not about creating a new version of Office that will be hosted in/on/via the cloud (contrary to a number of headlines/reports you may have read claiming this).


Microsoft held a 30-minute press conference on October 19 to unveil its strategy for planned upgrades to its Business Productivity Online Suite (BPOS), its Live@Edu offering and its Office Live Small Business service. That is what its Office 365 announcement was all about. (More nitty-gritty Office 365 pricing and licensing details can be found here.)

The Office 365 announcement was not about creating a new version of Office that will be hosted in/on/via the cloud (contrary to a number of headlines/reports you may have read claiming this).

Microsoft Office did figure into the Office 365 announcement in a couple of ways. Microsoft announced that for customers who want to buy the Office Professional Plus version of Office -- which runs locally on PCs, not in the cloud -- Microsoft will offer it to them on a subscription basis. That means users pay a monthly fee for Office, instead of paying for it all at once, up front.

(As one of my readers reminded me today, Microsoft volume licensees already can get this same Office Pro Plus SKU, though individual who buy at retail cannot. The Pro Plus SKU is the full Office family of products  -- Word, Excel, PowerPoint, OneNote, SharePoint Workspace, Outlook, Publisher, Access, InfoPath and the Lync communications client. Microsoft is not allowing Office 365 users to substitute a different Office SKU for it, officials told me yesterday)

In addition, because the new versions of BPOS -- the small business and enterprise Office 365 offerings -- will include SharePoint 2010 functionality, Microsoft will be able to offer Office 365 customers the versions of Office Web Apps that sync with SharePoint 2010. (Office Web Apps are not full Office; they are the Webified versions of Word, Excel, PowerPoint and OneNote that Microsoft rolled out last year.)

Yes, Microsoft's announcement yesterday had a lot of moving parts. But no, this was not some out-of-the-blue change in Microsoft's business model. Microsoft is still pushing Office first and foremost as a PC-based software package. And the Office 365 small-business and enterprise offerings (the update to BPOS) remain Microsoft's answer to Google Apps and other cloud-hosted business-app suites.

Speaking of Google Apps, it looks like New York City played its Google card in negotiating its latest software volume purchase with Microsoft. The New York Times says that the City got Microsoft to change the way it licensed them software and will end up saving $50 million over five years. It sounds from the details provided that New York got Microsoft to offer them a combination of Office Web Apps, possibly some BPOS and some on-premises software licenses mixed together.

This is definitely the way more and more of Microsoft's volume license deals are going to look in the not-so-distant future -- and Microsoft's licensing folks are already plotting what to do to capitalize on that mix.

One last Office 365 update: If you were among the many individual who were attempting to sign up for the limited beta yesterday to no avail, try again. A Microsoft spokesperson sent the following update, re: beta sign-in problems:

"The beta sign-up issues visitors we’re experiencing earlier yesterday happened when they were clicking 'submit' on the beta sign up form. The page was refreshing mistakenly. This should be fixed by now."

The beta is limited to 2,000 but signing up will get you a spot in line when Microsoft expands the Office 365 beta program.

Topics: Software, Collaboration, Microsoft


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).

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.


Log in or register to join the discussion
  • Sorry, folks

    Internet bandwidth just isn't capable of handling realtime operations with desktop applications. When you can get internet speeds -EVERYWHERE- that rival a local processor and RAM, then we'll see a compelling argument to move to full-on cloud computing for the masses.
    • Yes. This is not a criticism of Ofifce 365

      It is more of an explainer. I think a number of MS customers still want local Office copies on their desktop. For one, they get offline access (which Google isn't providing with their offerings still, last I heard).

      Also: MS does not want to kill off its Office cash cow just yet by offering everyone cloud-only Office. Once licensing revs start really declining for Office on PCs, they will pull the Office cloud switch, I think.

      THanks, Joe. MJ
      Mary Jo Foley
    • RE: Office 365: Sorry, folks. This is not Office in the cloud

      Agreed. Data intensive operations still need to be done on the desktop.
      The cloud part of Office 365 supports desktop computing, it does not replace it. All-in-all I think this is a very compelling offering.
    • Sorry Joe Raby, with HTML5 you have local storage and lighting fast

      Java Script performance. The performance is only a factor for saving the final versions, and, it can be cached locally to hide the effect of slow and or flaky connections.
      • RE: Office 365: Sorry, folks. This is not Office in the cloud

        @DonnieBoy - you've clearly not ever developed any software of note.

        While Javascript performance has improved dramatically over the last several years, it is still A VERY LONG WAY OFF the performance of C/C++ and a long way off the performance of .NET and Java.

        Now, yes, there are a large number of app scenarios where Javascript will provide adequate performance for perhaps 80% of tasks, but it's the 20% of tasks that are just too slow that tend to annoy users 80% of the time.

        It's a VERY difficult balance and, if you drive through a tunnel or sit in a building with poor wireless internet connectivity, you're screwed.
    • RE: Office 365: Sorry, folks. This is not Office in the cloud


      Internet bandwidth just * IS * capable of handling realtime operations with desktop applications.
      OTOH there are still many areas in the US and NA that lack a solid, widespread structure for digital communications. There are places near us here in NY that can't even have DSL because of the wiring infrastructure and/or lack of enough subscribers to make it profitable. Etc. Etc. Etc..

      When you can get internet speeds -EVERYWHERE- that rival a local processor and RAM: WE (people alive now) will not live long enough to see this occur. This poster seems to think 'net speeds will increase but not machine speeds. That's myopic and incorrect IMO and anyone I've spoken to with any wherewithal in the areas that would need to be affected. Not only that, there many areas other than speed to take into consideration. Even a privately controlled 'net couldn't meet the needed requirements.

      then we'll see a compelling argument to move to full-on cloud computing for the masses.

      Should I be wrong and it actually becomes possible to have 'net speeds that rival the desktop/laptop machines, "clouds" (a terrible misnomer) will either be long established and functional or long ago died when the speed matches occur.

      I have a couple interesting white papers on this subject but I'm not going to use them since the OP nor anyone else provided any such thing. Those with open minds to reality can find them easily enough on their own anyway.
  • RE: Office 365: Sorry, folks. This is not Office in the cloud

    Hi Mary-Jo,
    I currently use Office Live Small Business to host my mother's dog-walking business ( which, I note, is going to migrate to Office 365 (which ostensibly I'm quite happy about by the way) .

    I'm not clear on what the implications are for my mother and I - will we have to re-write that website using Sharepoint? Could you find out?

    Jamie Thomson (@jamiet)
    • What happens to OLSB

      Hey Jamie. So they are phasing out OLSB. They aren't offering exact dates or details yet. I put links and bits I did find in yesterday's piece: <br><a href="" target="_blank" rel="nofollow"></a><br><br>Powerpivot... Hmm. Let me ask. In the interim, if you click on the slides in this post, you can see their roadmap for which of the SharePoint 2010, Exchange 2010 and Lync 2010 features are slated to go to BPOS/Office 365 next year:<br><br><a href="" target="_blank" rel="nofollow"></a><br><br>MJ

      One more link: More Office Live Small Biz transition info:
      Mary Jo Foley
      • RE: Office 365: Sorry, folks. This is not Office in the cloud

        @Mary Jo Foley
        Thanks for the links. I've just been watching the announcement video ( where Mr Capossella said:
        "We're also delivering a public facing website for small businesses so that they can create their own presence on the internet with incredibly simple tools, just using Sharepoint to edit and publish content on the web"
        (about 19:50 in)

        Guess that answers my question!!

  • RE: Office 365: Sorry, folks. This is not Office in the cloud

    Another question I'd be interested in knowing the answer to is "When will Powerpivot be available on Office 365?"

  • Outlook Business Contact Manager

    Note that MS Office 2010 Professional Plus SKU contains the Outlook Business Contact Manager, unavailable on ANY retail SKU (unlike the 2007 incarnation).
    So if you want it/need it you either have to get a volume license or pay by the month.
  • RE: Office 365: Sorry, folks. This is not Office in the cloud

    I think is clear this is Online Services V2.0 personally I didn't ever hear about Office 365 but taking a quick look seems evident this is Online Services on steroids which is a smart move, consolidate everything once and for all in a more compelling product and easier to understand
  • Way to follow the herd...

    I don't think M$ can compete with GoogleDocs, especially now. For people who uses cloud storage, GDocs is reliable and already in the forefront. I don't get M$' pricing and how they think they can compete while charging people and showing ads. It is a poor attempt to go against Google, plus there are a lot of open-source collaboration applications (RIP GoogleWave). Plus, to get this Office 365 working well, you'll need a better performance PC and blazing fast internet connection to appreciate all the esthetics, etc. Will they come with an 'offline mode'?
    Even Apple has been there and done that with MobileMe, but at least there is a use for it, for syncing all your media, emails, pictures, etc., and it's also subscription based. Although they don't market it as 'enterprise' software, it's the same idea. M$ has to come up with something more groundbreaking to steal away users.
    My 2cents...

    • Its simple

      @babaman Google Docs does not offer any way to work offline - i.e. while not connected to the internet. To do so you would have to first export the document to a format you could work with locally such as a MS Office document (ironic there) or an Open Office Document. So if you like to work on a plane or any other location where you either have no internet connection or there is one but you don't want to pay for it, Google Docs doesn't work unless you also have some other product installed locally. If I have to have Open Office installed locally, why not just use that all the time and skip Google Docs entirely?
      • Whatever happened to Gears?

        Wasn't Gears supposed to address this?
      • Gears was discontinued

        OffsideInVancouver, from what I understand, probally because not many people where in all that much of a hurry to store things in the cloud.
        John Zern
    • RE: Office 365: Sorry, folks. This is not Office in the cloud

      @babaman You should be embarrased about how ill-informed you are. Be gone, and don't return.
    • This is how game works

      An IT manager responsible for deciding document systems is under pressure to provide collaboration facility to users scattered across multiple locations. Earlier (s)he had only GoogleDocs as choice. What MS is doing in this case is providing another disruptive choice to them. Now IT manager will chose Office 365 over GoogleDocs because he will have less justification to do; because most of users in their office already familiar with MS office on their desktop.

      Once IT manager does roll out Office 365, users in office will realise that it is not same as desktop version, very limited in usage and several issues with synchronisation. Also MS is serving Ads, which does not go well. So they reduce usage or discontinue using office 365 and remove their wishful thinking of using office in cloud and return back to traditional one user, one desktop, one license scenario. If they need to collaborate they will need all supporting technologies such as Windows OS, sharepoint, exchange server, Active directory, network storage space, VPN tunnel to access files and so on. Its big business for MS.

      Someone said earlier that MS will never replace office cash cow with online offering. We forget that if office is available online then it will replace much more than just office from their desktop.

      I think google is doing OK job; but not sure why they want to keep running away from offline applications. Offline access to GoogleDocs is key issue for adoption of google docs.
  • I hope I'm not being too dense here...

    So "Office 365" is just regular, locally-installed Office like we've had for many years, except that it's rented on a monthly basis now? Office 365 is not run within a browser, it's not advertising supported, and it's not free like Google Docs?

    How is this the update or replacement for BPOS then? What is the relationship between 365 and BPOS? What are Microsoft's current and planned browser-based versions of Office?

    Sorry if I'm being dense here, Microsoft's advertising is once again a total confusing mess...
    • RE: Office 365: Sorry, folks. This is not Office in the cloud

      @JFDude Office 365 works on your browser but the licensing model can include desktop version as well.. So you can work offline, unlike Google Docs.