About Those Office 365 Adoption Numbers

Microsoft corporate vice president Yusuf Mehdi mentioned during his appearance at the Ignite keynote that there are now over 70 million active users of the commercial versions of Office 365. But that number isn't new. What's going on with Office 365 adoption?

While I often praise Microsoft for its transparency, the firm has made it difficult to ascertain the success of many of its products using traditional methods. With Windows 10, for example, Microsoft has moved from marketshare-type numbers (licenses sold) to usage share (active devices). But it is quite opaque about other products and services. Skype, for example, has apparently never moved past its 350 million user milestone, and Microsoft measure Xbox success on engagement---time spent online, perhaps---rather than boxes sold.

Office 365 sits somewhere in the middle of these two extremes. Microsoft does report the number of Office 365 subscribers from time-to-time, but not at the rate at which it does for Windows. And it does separate its consumer subscribers from its commercial subscribers, the latter of which includes businesses, education, and governmental customers.

Today's 70 million figure is for commercial subscribers, not consumers. And as noted, it's not new. Microsoft revealed this figure as part of its quarterly earnings announcement in May 2016. So that number is over three months old.

The latest figure I can find for Office 365 consumer customers is 23.1 million. That number is from the previous Microsoft quarterly/annual earnings announcement in July.

Taken together, we see roughly 100 million people actively using Office 365, or at least paying for it, which one might argue is the more important metric. But this number is problematic on a number of levels.

First, there are 1.2 billion active Office users in the world. So Microsoft has only been able to convert about 8 percent of the Office user base to Office 365. This is a tiny figure for a business that was for several years Microsoft's biggest source of revenues. The digital transformation at Office, at least for now, is more dream than reality.

Second, there are real concerns about the percentage of Office 365 subscribers that will re-up for the service, especially on the consumer side. It's not unreasonable to believe that a huge number of those 20 million-ish Office 365 consumer users received the service for free with a new PC. And when that subscription runs out, they may decide to choose a free online option---like Google Docs---instead of actually paying. That kind of loss is doubly damaging because switching can be hard, and it's unlikely that anyone who does make such a switch would ever come back to Office.

And then there's the simple fact that 100 million is not a big number for a service that has been available in its current incarnation for several years. Office 365 isn't new, like Windows 10, it first debuted in 2011. And the consumer versions first shipped in early 2013. Grant...

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