Microsoft subscription focus as Office package updated
MICROSOFT’s new Office software will incorporate internet-connected features such as Skype and the Cortana digital assistant in both its cloud and packaged versions, underscoring the importance of installed software even as the company focuses on moving customers to subscriptions.
Office 2016 offered flagship productivity applications like Word and Excel, with tools for videoconferencing, voice commands and collaboration, said John Case, the vice-president for Office.
Office remains Microsoft’s single biggest product, with sales of $23.5bn in the latest financial year. The company has been focusing on the Office 365 cloud-based versions of Office, where customers can get monthly updates without installing the software on-site. Still, only a quarter of commercial Office customers are using the cloud version this year, meaning Microsoft needs to keep apps in the packaged version, whose last release was Office 2013, updated and modernised.
“The focus is on the cloud, and there are steady, but diminishing, offerings on-premises,” said Wes Miller, an analyst at Directions on Microsoft.
Office 2016 will be available on Tuesday. The new software adds what Microsoft calls modern attachments to its Outlook e-mail and calendar application. Instead of static attached files, workers can set a link to a file that will always contain the latest version.
Users can verbally ask Cortana, Microsoft’s digital assistant, to find a file or e-mail, and the Bing search engine is integrated so that hovering over a word with a mouse brings up a menu of choices including web search.
Cloud versions of Office are delivered as a subscription, so customers pay recurring fees rather than one upfront purchase. The company does not have to persuade people who own perfectly good older copies of Office to pony up for newer versions.
“For Office, we serve such a broad customer base, I don’t know if one size fits all,” chief marketing officer Chris Capossela said. “There are some customers that don’t pay a subscription and I don’t want to turn them off.”
Chief financial officer Amy Hood said in April that by 2018, she expected half of commercial Office customers would be using the cloud version.
Mr Case said half the renewals for Office multi-year agreements were now for the cloud version, and there were a million new consumer users a month for Office 365.
Microsoft would make new versions of the installed versions of Office as long as there was demand, Mr Case said, but the focus would be on building up the cloud products. To that end, some advancements such as Planner, a project-management and scheduling tool will appear in Office 365 only, .
“We see much more momentum on the cloud side and that’s where you’ll see the innovation first,” he said.