Office 365 launch puts emphasis on small businesses

Microsoft has launched Office 365, its cloud-based suite of familiar tools, such as Office, SharePoint and Exchange, which it says gives smaller businesses the IT benefits afforded to enterprises
Written by Ben Woods, Contributor

Office 365, Microsoft's cloud-based office productivity suite, is now on general release.

Office 365

Office 365, Microsoft's cloud-based office productivity suite, has gone on general release. Screenshot: Jason Parker/CNET News

The cloud-based replacement for Microsoft's desktop tools can be configured to include Office Professional Plus 2010, SharePoint Online, Exchange Online, Lync Online and web apps. The tools build upon the Business Productivity Online Suite (BPOS) and are accessible from a range of platforms, including Windows Phone 7, Apple iOS and Google Android devices, via a web browser.

Although there is a version geared for enterprises, the suite will be particularly attractive to small businesses, Microsoft said at the launch event on Tuesday.

"We're seeing organisations reporting up to a 15-percent improvement in terms of the cost of running their IT services," Gordon Frazer, managing director of Microsoft UK, said. "We think small businesses have an enormous amount to gain from Office 365, which brings together enterprise-class IT services that most large enterprises now demand, and to some extent take for granted, but for small businesses it's difficult to have that same competitive advantage."

The offering, which is priced at £4 per user per month for small and medium-sized businesses, also provides anti-spam and antivirus filtering via Microsoft Forefront Online Protection for Exchange. Enterprise subscription options — for companies with more than 50 employees — range from £6.50 to around £18 per user, per month.

Users of BPOS with BlackBerry Enterprise Server (BES) integration will be migrated to Office 365 later in the year when Research In Motion launches its cloud-based version of BES, a Microsoft spokesman said. Non-BES users can migrate before that.

Office 365 vs. Google Docs

Office 365 provides similar functionality to other online collaborative productivity tools from competitors such as Google, but Melissa Webster, programme vice president of content and digital media technologies at IDC, says that Microsoft has the more compelling offering.

Office 365 is more expensive than Google Apps, but in reality Microsoft's target is different.
– Melissa Webster, IDC

"It's more expensive than Google Apps, but in reality Microsoft's target is different. Microsoft has a very broad and deep enterprise collaboration offering — arguably more features and functions than most organisations can really exploit — so it's going to be able to make a strong case," Webster told ZDNet UK. "Google has finally conceded that folks aren't giving up Office on the desktop anytime soon — witness Google Cloud Connect for Microsoft Office, released this spring."

Webster said that despite the surface-level similarity between the two companies' productivity tools, the rivalry is not as straightforward as it seems.

"Google and Microsoft are coming at online productivity suites from really opposite directions — Google is a consumer/media company stretching up to the enterprise, and Microsoft of course is the reverse, reaching down into consumer," Webster said. "I expect Microsoft's enterprise roots to serve it well in Microsoft shops."

Service outages

Earlier in June, Office 365's predecessor BPOS suffered outages that prevented users from signing into the service and accessing emails and other features. According to analysts, Office 365 has a ready customer base but will need to demonstrate that reliability and security are up to scratch in order to persuade users to move their tools to the cloud-based suite.

"The thirst to move to the cloud for email and other collaboration services is so great that minor outages and product hiccups are unlikely to dissuade organisations that have already decided on the cloud," Matt Cain, collaboration and email analyst at Gartner, told ZDNet UK. "Pent-up demand is enormous, based on the generally faulty assumption that cloud economics and performance always trump on-premises deployments.

"The pressure is really on Microsoft to deliver a quality service with Office 365. BPOS was really just a trial run, and Office 365 represents the big leagues. Imperfect delivery of Office 365 opens the door to Google Apps," Cain said.

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