Microsoft kicked off this year with a major rebranding campaign that positions itself in the public eye as a cloud software vendor. “Cloud Power” has already started to appear in print, online, radio and TV commercials over the next weeks around the globe.
It reveals the focus of Microsoft’s cloud push: Office 365, Windows Azure and Windows Server Hyper-V. Its scale – it will cost hundreds of millions of dollars – also shows how keen the vendor is to associate its name with the next model of computing.
The most anticipated product is the mainstay of small and medium businesses – the evolution of the Office brand, Office 365.
CRN spoke to Microsoft Australia executives last month who were in Seattle for training on Office 365 and associated marketing plans.
Clearly excited about this year’s transition, they were able to give a little more information about what to expect in Microsoft’s major cloud debut.
Office 2010 sets the stage
Microsoft is hoping that the launch of Microsoft Office 365 will emulate the success of Office 2010.
The latest version of the productivity suite was the fastest-selling version so far, with one selling every second somewhere in the world, says Microsoft software director Oscar Trimboli.
“The No.1 thing that is coming across is the optimism. With the launch of Office 2010 and SharePoint they ended up being front and centre in the financial and analyst earnings reports with really strong performance in those products, which are strong engines for our business,” Trimboli says.
“I think as a brand [Office 2010 and Office 365] are totally linked and the momentum from that launch and the customers we engage with. Our customers are telling us we are working on the right things and we are putting in the functionality that helps them make their business run.”
Office 2010 already has many hooks into Microsoft Online Services through Windows SkyDrive and SharePoint Online. Microsoft has based its decision to sell on-premise software and cloud software as a package with its “software plus services” strategy. “For us it’s a real differentiator compared to other products in the marketplace. I think customers really want a consistent user experience,” Trimboli says.
Microsoft's cash cow is up against Google Apps. Although Google dominates search, it has just 3 million apps customers. Microsoft says users want the “flexibility” to use an application offline and online because global internet coverage is unreliable even in highly developed cities.
“Whether they are big enterprises or people who run their own business, ubiquitous connectivity is not there today,” Trimboli says.
He says the “rich application environment” of a locally hosted office suite makes interactions such as making a call or setting up a web conference much easier and quicker on a PC.
Google Apps’ advantage is that it is cheaper – US$50 (A$49) a user a year – and licences are simpler because there is only one copy. Microsoft sells the benefits of an on-premises installation because, despite its proclaimed desire to move to the cloud, it will not sell customers the productivity suite capabilities of Office 365 unless they own on-premises versions of Office.
Office Pro Plus
Office 365 has the familiar stable of programs in the Business Productivity Online Suite (BPOS) – SharePoint Online, Exchange Online, Office Communicator Online (now Lync Online) – and Office. Office Pro Plus is a cloud version of Office with Word, Excel, PowerPoint and OneNote.
With Office Pro Plus, “for the first time customers will be able to buy Office in the cloud”, says Kelly Innis, product marketing manager for Microsoft Online Services.
Innis confirms that customers won’t be able to buy Office Pro Plus in the cloud as a standalone service, unlike Google Apps.
Three of the Office online services – Lync, SharePoint and Exchange – are bought separately.
A customer can only buy Office Pro Plus if it is bundled with at least one of the other three services. Prices also change to charge by user rather than by device. One user will pay a monthly fee but has access from multiple devices, including those with Windows 7 Mobile.
There will be room to move with licences for enterprise. The updated Microsoft Enterprise Agreement will let large customers translate some on-premise seats to the cloud.
Innis also confirms Telstra will retain exclusive distribution for the SMB market, despite rumours in last December that distribution would be opened up to partners as in New Zealand.
“Anyone who doesn’t have an EA [enterprise agreement] with Microsoft will receive service from T-suite.com,” Innis says.
“Customers that purchase Office 365 will pay on a per-month basis for whatever they choose to use. Some will buy the full suite, some will buy just Exchange and Lync, depending on their needs.”
Innis says the suite’s addition to the online service will boost appeal beyond BPOS: “Office 365 is a significant transition from BPOS. It really is more than the next generation”.
Launch plans will come with and without Office Pro Plus. The main SMB plan is for organisations with 25 seats – which is not a technical limit, Innis says.
“The feature set of that service we feel strongly matches what a customer of that size would require.”
A feature Innis expects to be very popular with SMB customers is My Sites, “like Facebook for SMBs”.
“They can create an internal website and post docs to share, see the presence of colleagues within that site, use instant messaging and collaborate on documents. New capabilities are levels of permissions in terms of accessing content and sharing material across organisations.”
T-suite.com customers get Lync Online, SharePoint Online and Exchange Online with a reduced features set, Innis says. The missing features, mainly in SharePoint Online, are enterprise focused
and relate to collaboration across multiple organisations with thousands of employees and access to SharePoint Online by role type. “They are features that an SMB will never need” and the products are priced accordingly, Innis says.
Microsoft is also backs its sarvice contracts with financial penalties, unlike Google Apps. It guarantees 99.9 percent uptime for BPOS and Office 365. “Any time a customer experienced
an outage, they receive 100 percent of their monthly fee back from Microsoft,” Innis says.
“Google doesn’t offer those same terms. Google doesn’t count outages that are less than 10 minutes each. And the support is very different to what Microsoft offers; 24x7 support for Online Services through T-Suite and through Microsoft for enterprise agreement customers.”
Microsoft’s early foray into online services was timid, with few features compared to the on- premise versions. Innis says this will change with Office 365.
“The vast majority of features available in on-premise will be available in Office 365. If you were a really huge enterprise customer there may well be some differences in feature set. Like in SharePoint, for example.”
Deskless Worker, a cut-down version for employees who don’t have desks, is renamed Kiosk Worker. BPOS customers using these licences include hospitality and airlines which provide them for flight attendants, runway workers and so on. SharePoint Online and Exchange Online will not differ too much from current services. Lync will be a major upgrade to the Office Communications Server in BPOS that it supersedes.
Lync Online
Lync, the sequel to Office Communications Server, was launched in November. Although Microsoft only released the on- premise application, the vendor says Lync Online will not bring any new features when it launches as part of Microsoft 365 later this year.
“There won’t be any significant changes or updates from Lync 2010 to Office 365,” says Oscar Trimboli, director of information worker business, Microsoft Australia. The upgrade from Office Communications Server was “a bit more than a name change”, Trimboli says. Lync added deeper integration of voice, video and web conferencing. One new feature is Skill Search – instead of searching by name, users can type in finance director or programmer and set up a call.
Other changes include the inclusion of high-definition video and more extensible APIs that can connect to line-of-business applications such as finance and CRM. “Instead of people having to go to a different system to make a call they can click a button in the application. The APIs allow them to do that,” Trimboli says.
Brian Walshe, general manager, Microsoft Solutions at Dimension Data, says there is one major change in which the online version of Lync catches up with the more heavily featured on-premise application. “Lync on-premise and Lync Online become much closer in what they can do,” Walshe says.
“Particularly in that they can support federation.”
Federation is a critical development; it allows users to contact people by instant messaging outside the corporate network.
BPOS, the vendor’s current cloud service to be superseded by Microsoft Office 365, does not support federation with Office Communications Online. This means that BPOS users can only see presence and instant message other colleagues, which is a huge limitation of the technology’s potential.
“If you were happy with instant messaging presence in your organisation then that was fine,” Walshe says.
“But people saw value in federation. We are federated with most of our suppliers and partners. I have a lot of friends who work in MS in the US. I can see their presence, IM them, go to a call or video.”
Dimension Data has offices in 42 countries and its employees use instant messaging and presence to make the most of calling in different time zones.
An end to phone tag
Presence has been a feature largely reserved for enterprise. With Microsoft Office 365 and Lync Online, it will become available for small businesses to trial and use with very little effort. It is hailed as a time-saving feature that kills off the annoying phone-tag routine – two people repeatedly calling each other at times when each is unavailable.
Think about how much you use your phone to call someone on their mobile and the person doesn’t answer, Walshe says.
“It’s probably about half the time. You would normally then try their desk phone.
“Across time zones you might have a very small window to catch up and if you miss them you will have to wait another day. Presence lets you cut out the dead time.”
Lync is integrated with Exchange and resolves against appointments in the calendar.
Presence is updated according to availability; if users have a meeting entered in their calendar, Lync will show they are busy. Lync can also be integrated with the phone system to show when a user is on a call.
“There’s no point in me ringing you if you’re on the phone. I can IM you and say can you ring me when you’re available.
"Or I can see that you’re busy until 2 so I’ll call then, or if you’re busy until the end of the day I’ll drop you an email,” Walshe says. “It really is a very powerful tool in business.”
Hold on to the PABX
Cloud-based communications vendors such as Fonality already have services which can replace the on-premise phone exchange (PABX) for small businesses.
Working phones are a critical resource for many businesses, and moving their operation to a cutting-edge cloud service is not something many business owners would do lightly.
The proposition changes when the world’s biggest software company starts saying that it can do it too. Microsoft explicitly said in its November Lync launch the software could replace a company’s PABX.
However, Walshe says that Lync Online will do most things except for enterprise voice, which would come from various third-party vendors instead.
Companies with Microsoft enterprise agreements could turn to their integrator or reseller for IP telephony.
“The goal is that third-party providers will provide voice capability,” Walshe says.
Given that Microsoft Office 365 will be sold to smaller companies through Telstra T-Suite, it is expected the telco will handle IP telephony through Lync Online itself.
Doing so would no doubt further erode the leading telco’s fixed line revenues, but Walshe says Telstra may have had no choice.
“The reality is that if you’re not offering the service and keeping those customers, the likelihood is that you will lose the customers anyway and whatever else the have with you,” Walshe says.
“You’re going to get to a point like King Canute trying to hold back the tide.
"You can stand there and demand that this doesn’t happen but it’s going to happen anyway, and if it’s going to happen you may as well be the ones that are doing it rather than allow someone else to do it to you.”
Dimension Data was not ready to reveal its plans for IP telephony and Lync Online.
However, the global integrator was acquired by major Japanese telco NTT, which has recently
expanded its offices here. “We know that there’s a huge number of OCS and Lync seats out there so I think there will be a huge number of people moving up,” Walshe says.
"I’ll expect there will be some really attractive deals put to people. Without doubt it’s the direction Microsoft prefers people to be going.
“If you look at what you can do with a cloud versus on-premise solution, having people on the latest version is a great way of doing things.
"There’s no doubt that for all the cloud providers, once they get people into their environment they’re less likely to see them churn to someone else.”
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