30% increase in Office 365 subscriptions shows bright future for Freemium Innovation

Kareem Anderson

30% increase in Office 365 shows bright future for Freemium Innovation

Yesterday we wrote about some marketing tactics Microsoft was looking to explore in their journey to polish their brand image. One of those tactics mentioned was embracing and cultivating a Freemium Innovation pattern. According to Microsoft’s Chief Marketing Officer, Chris Capossela, adopting the Freemium Innovation spirit means offering innovation and functionality that coincides with flexible tiers of pricing. Microsoft is shifting their blind flat-rate licensing approach when it comes to consumers these days. Instead of paying for bundled functionality and services users may never use, many of Microsoft’s services are now offering free previews.

Naturally there will be challenges for both Microsoft and consumers in adjusting to this new approach, but it looks like Office 365 is quickly becoming the poster child for Freemium Innovation. Office 365 has helped Microsoft adapt to an influx of distribution while also addressing the way people are now using office. Kirk Koenigsbauer, corporate vice president of the Office 365 Client apps and services team says, “Since the Office for iPad announcement last March, we’ve worked hard to bring the power of Office to every person, across every platform and device, so people can get things done on their terms,”

Microsoft is quickly finding out that lowering the barrier to entry with a free tier, exposes more people to the innovations the Office team is bringing to an area where people are increasingly gravitating. This news has also led the Office team to investigate the best method of converting those users beyond their one device. With subscriptions to Office 365, users can extend their value of Office 365 beyond their desktops, tablets, phones and to cloud storage or international video conferencing. Kirk  and the team claim, “That’s why we’ve seen demand for these premium consumer subscription services grow—Office 365 Home and Office 365 Personal grew to more than 9.2 million subscribers in the last quarter, up 30 percent.”

As much as this is news is great for consumers, we have to realize that much of Microsoft’s money is made in enterprise. Kirk and his team also have to address how Freemium Innovation affects their much larger enterprise install base. As slow as industry appears to move at times, consumers and IT pros move much faster. Having a Freemium model in place for customers would naturally invite “innovative” ways for IT Pros to engage with Office 365.

Kirk addresses these concerns as well, “In the professional world, we’ve approached things differently. These users require more than simple apps: Organizations need an integrated product suite. They need security and reliability. And most of all, they need to be able to get things done, wherever they are”.

Serving professional users on a subscription-only basis makes sense, because of those extended needs, and the resulting product categories and licensing models for business customers are a key element to Office 365 experiencing phenomenal growth. As more companies take Office to the cloud, commercial seats for Office 365 are up 88 percent from a year ago.”

30% increase in Office 365 shows bright future for Freemium Innovation

Kirk and the office team are looking forward to the changing landscape of technology. He and the Office team see this as their showroom for Office. With the likes of the Samsung and Dell agreements, it is apparent that the Office team is much better prepared to execute on Freemium Innovation.

The question remains, will the Windows team be as successful with Windows 10 this fall?