A Closer Look at Those Office 365 Adoption Numbers (Premium)

Microsoft often speaks about the "transformation" that it is undergoing in its transition to the cloud. But I sometimes wonder if Office will be left behind in this transition.

Yes, Office is technically better poised for this transition than Windows because it is available cross-platform: Microsoft makes a full desktop version of Office available on the Mac, and there are mobile versions of the big Office apps on Windows 10, Android, and iOS, and on the web. But Office still suffers from the underlying problem of the "mobile first, cloud first" world. Which is that, as people move to ever-more mobile devices, they become used to simpler and more consumer-focused apps and services. And in this world, Microsoft no longer commands the cachet it had in the desktop PC world.

I've often held up Office 365 as an interesting example of Microsoft's transformation in this new world because it is so easily understood. The Office applications and suites of the past were dominant on desktop PCs and Macs, and were sold to end users and businesses in very traditional ways. But the Office mobile apps and services of today are a different animal, and they work better---or, work at all---when one subscribes to Office 365. So the health of Office 365, as a business, is one way we can determine how well this transition is going.

That Office was once Microsoft's largest single business---it surpassed Windows in the days before "mobile first, cloud first"---makes this doubly important for the software giant. That is, the more of its Office user base it can transition to Office 365 the better. So the size of the Office 365 user base is one of the many metrics I examine each time Microsoft releases a quarterly financial report. Which it just did.

While this isn't the first time I've raised an alarm on this topic, I'm not sure Office 365 is growing at an acceptable rate at all. And this leads me to wonder why that might be the case.

First, the numbers. I noted back in September that Microsoft's then-most-recent numbers for Office 365 subscribers was 70 million on commercial versions (a number that dates back to May 2016) and 23.1 million for consumers (which is from July 2016).

In the October quarterly results (for Microsoft's first fiscal year in 2017), the firm reported 85 million commercial subscribers and 25 million consumers.

This past quarter? Microsoft never reported commercial subscriber numbers---which I find troubling---but Petri's Tony Redmond estimates the number might have hit 96 million given previous trends. And consumers were at 25 million. Again.

UPDATE: Microsoft now tells me there are 85 million Office 365 commercial active users. I'll keep the math here intact, but that is the correct figure. --Paul

120 million may seem like a big number. And it is. It is, in fact, 20 million bigger than the number I cited last September.

But this number still pales in comparison to the 1.2 billion Office users that Microsoft tou...

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