Microsoft: We'll have two-thirds of Office users in the cloud by fiscal 2019

Microsoft is running ahead of projections in terms of how quickly its Office users are moving to Office 365, says the head of Office. And more LinkedIn integrations are coming soon.
Written by Mary Jo Foley, Senior Contributing Editor

During Microsoft's most recent earnings call, officials said that commercial Office 365 revenues for the first time were greater than non-subscription/perpetual Office ones.


Currently, according to Microsoft, more than half of all commercial (business) Office users are using Office 365 rather than standalone/perpetual Office. But during some point in the company's fiscal 2019 (which kicks off on July 1, 2018), Microsoft is expecting two-thirds of its business Office customers will be using Office 365.

That prediction comes from Rajesh Jha, executive vice president of the company's Office Product Group and member of the Microsoft Senior Leadership Team (SLT) inner circle. Jha made the remarks during last month's Deutsche Bank Technology Conference in Las Vegas.

Jha also said that Microsoft expects 70 percent of its Exchange/Outlook users to be using the cloud, rather than on-premises versions of those messaging products by Microsoft's fiscal 2019.

"We are running about a year ahead of where we thought we would be two years ago," he said. "Internally we think we're running about a year ahead on the customer's transition."

Office 365 currently makes up the bulk of what Microsoft calls its "commercial cloud" services. (Other services in that bucket include Azure, Dynamics 365, and Power BI, but not LinkedIn.)

As of the end of the company's fourth quarter of fiscal 2017 (ending June 30, 2017), Microsoft was at an $18.9 billion commercial cloud run rate, officials said. That was up from $15.2 billion last quarter. Microsoft set the $20 billion commercial cloud run rate goal for itself in April 2015.

Speaking of LinkedIn, Jha said Microsoft's continued first priority with that acquisition is "to grow our engagement" with LinkedIn users.

Microsoft so far has not delivered on many of its planned Microsoft-LinkedIn integrations, but I'm hearing Microsoft may have more to announce on this front before the end of calendar 2017.

Microsoft remains committed to more tightly integrating LinkedIn with Office so that the two will share common identity and profile information. At the company's recent Ignite conference, Microsoft announced integration between Office profile card and LinkedIn data.

But Microsoft plans to go further on this front, enabling customers to "know the meetings, the trending documents, the people you work with," said Jha, based on the shared identities between Office and LinkedIn. He said "those are the things you would be seeing coming out shortly."

He also mentioned the previously announced plan to integrate applications like Microsoft Word and LinkedIn web services, which would help someone creating a resume "get the trends for the skills and get that populated right into Word." Microsoft also is likely to expose those creating resumes to the jobs based on the construct and content of the resumes they are writing, he said.

More integration between LinkedIn and Dynamics 365 is coming, too, he told Deutsche Bank conference attendees.

"Now if you take LinkedIn and Dynamics together, that's like a $5 billion business, 70 percent in the cloud. Dynamics itself has grown 75 percent year-over-year. So we are very excited about that," he said.

The big picture for Microsoft and LinkedIn revolves around integrating their respective data graphs, Jha reiterated.

"(CEO) Satya (Nadella) has talked about the intelligent cloud and the intelligent edge," Jha said. "In many ways Office is the intelligent edge. But the other important node here is the intelligent data, or the intelligent network. So you take a Microsoft Graph, you take the LinkedIn Graph, that's our intelligent network. So we start from that core."


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