Microsoft 365: Will Microsoft Migrate to All Subcription Services? (Updated)

Update: Microsoft just announced their Q1 2015 financial results, and they did quite well. Relative to this post, the fact that 7 million consumers are subscribing to Office 365 is particularly interesting. Makes a pretty strong case for the kind of subscription service I envision here…

Update 2 (10/27/2014): So, Microsoft announced unlimited storage for Office 365 subscribers. Obviously, they see subscriptions as the future.

Update 3 (11/12/2014): Well, Microsoft has indeed created a more comprehensive subscription, called the “Work and Play Bundle,” that includes the consumer services I mention here with the exception of Windows. At $199, it’s a little pricier than I expected (particularly excluding Windows), but it’s a step in this direction.

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I had a quick thought this morning as I went through the endless list of stories about Microsoft and its strategy given tomorrow’s Windows event. As usual and expected, speculation is rampant, with a great deal being made about Microsoft creating the underpinning to a subscription Windows service (or, at least, a Windows that is more consistently updated and that acts like a subscription service).

My thought is this: we already have Office 365, and so how about a “Microsoft 365” offering? It could include Windows, Office, and various existing Microsoft subscription services such as Xbox Live and Music. Given Office 365’s price point, and then roughly $10/month each for Xbox Live and Music, I could see a bundled price of $149/year for the home version of Microsoft 365. Pricing for business and enterprise versions would vary based on volume, and like Office 365 could include SharePoint, Azure, and other relevant business services. Just like Office 365, Microsoft 365 could allow Windows installs on multiple machines, and perhaps multiple types of machines (e.g., whatever Windows RT becomes for future tablets).

Personally, I think that would be an incredibly powerful offering. We’d get the best of Microsoft productivity and consumption services, all wrapped around Windows as the foundation. Everything would remain up-to-date, with updates pushed as available similar to Microsoft’s recent implementation of monthly Windows updates to go along with their Patch Tuesday security fixes.

Of course, Microsoft could continue to offer their services for non-Windows platforms, in keeping with their strategy to push their cloud services everywhere. Perhaps they could create a bundle that includes Office 365, Xbox Live, and Xbox Music for around $129/year, close enough to the Windows version to make the jump more attractive. This may not cause current Mac users to make the switch, but if OEMs included a Microsoft 365 subscription with the purchase of Windows machines, that might be enough to sway new purchasers who are currently sitting on the fence. On the high end, where Apple is most successful with the MacBook line and where premium hybrids are an area of growth and a Windows strength, it would be easier to include full Microsoft 365 licenses with the purchase of higher-priced (and higher-margin) Windows PCs.

Given the impact of Google’s Chromebook and Docs initiatives on Office sales, I’m not sure that Microsoft has any choice but to do something. While they may fear giving up full Office license revenues, I think the alternatives are too robust for them to imagine that nearly as many people will spend hundreds of dollars on Office. Offer enough value in a subscription, however, particularly if it can be bundled into hardware sales, and Microsoft could lock in whole swaths of people who today might find Google Docs good enough.

What do you think? Would Microsoft 365 make sense? Would you buy into it?