Microsoft Office 365 – Coming soon to a cloud near you

Eschewing the virtual desktop for the truly virtual, Microsoft has announced its next generation productivity suite bringing together Microsoft Office, SharePoint Online, Exchange Online and Lync Online in an always-up-to-date cloud service.

Office 365 will be delivered in early 2011 and will be available in two flavors; one targeted at small business and the other targeted at enterprises. Until then Microsoft has opened a limited beta program for Office 365 is available 13 countries – sign-up is available here for people who can’t wait until next year to experience it . Although given the evident enthusiasm at the time of announcement it may well be that all available spaces will have been exhausted by now.

Office 365 for small businesses is designed for organizations with less than 25 people (the maximum number of users it can be licensed for is 50), and will include:

  • Office Web Apps for viewing, editing and sharing documents
  • Exchange Online with 25 GB mailboxes for each user and the ability to send emails with up to 25 MB in attachments
  • ActiveSync support for mobile messaging and scheduling services
  • Sharepoint Online Team Sites and web hosting service
  • Anti-virus and anti-spam solutions
  • Integrated instant messaging and online meetings with audio/video conferencing and multiparty data sharing through Lync Online
  • 24×7 moderated community-based support

Remarkably for a company looking to encourage customers to get offer IE 6 as quickly as possible. Microsoft will provide  email support from browsers as old as Internet explorer 5.5 through Outlook Web App Light.

When launched next year Office 365 for small businesses will free for the first 30 days and then just $6 per user per month. Microsoft’s current web based small business service Office Live Small Business (OLSB) will be phased out some time after October 2011. To sweeten the transition, existing OLSB customers will be offered 3 months free  service with Office 365.

For larger organizations or those looking for more enterprise focus features, Microsoft is offering Office 365 for enterprises, which will replace Microsoft’s Business Productivity Online Suite (BPOS) . Unlike the small business service,  Office 365 for enterprises is available in multiple editions referred to as “plans”, and for large enterprise deployments is subject to volume discounting. All editions of  Office 365 for enterprises include email archiving (for legal compliance etc.), integration with RIM’s Blackberry Enterprise Server, Active Directory integration for entitlement management and authentication, and 24 x 7 telephone support. In-line with the “Enterprise” focus, this version will drop the web hosting service, but for organizations looking to obtain this feature Microsoft recommend taking out a single small business license to supplement the enterprise accounts.

The lowest cost Office 365 for Enterprises plan are the Kiosk Plans that are designed for users without a primary PC.  These plans offer access to Exchange Online access for email and calendar management  through Outlook Web Access with a 500 MB mailbox for $2 per user per month. The base Kiosk Plan can be extended to include additional services for including SharePoint for a further $4 per month and Office Web Apps for a further $6.

Microsoft will also be offering Office 365 for Education that offer plans tailored for junior and higher education which will be free for students, but system administrators will still have to budget for administrative tools.

Both small business and enterprise plans can be extended through the inclusion of Office Professional Plus which includes the latest versions of Word, Excel, PowerPoint, Outlook, OneNote, Publisher, Access, InfoPath, SharePoint Workspace and Lync, for a further $12 per user per month. This is the standard locally installed off-the-shelf application package – it is not delivered using Remote Desktop Services (RDS) or streaming technology.  The only concession to its new status as subscription service is a change to the licensing terms and conditions and the presence of an installation setting which requires the application to ‘phone home’ on a regular basis to confirm that the product license is still active.  Microsoft did not confirm how the license is enforced, but given the description provided it is most likely to be using the  Key Management Service (KMS) licensing mechanism from Microsoft Volume Activation 2.0 as used with Office 2010.

The most fully featured Office 365 package provides all the following features for a list price of $27 per month:

  • Office Professional Plus desktop software
  • Office Web Apps Web productivity applications
  • Exchange Online, including e-mail, mobile access, calendar, discovery, anti-virus, anti-spam, voice mail, unified messaging and archiving
  • SharePoint Online, including advanced portals for collaboration, Microsoft Office Forms, Access, Visio and Excel services
  • Lync Online, including IM, virtual meetings, full VoIP services and on premise PBX integration through third party gateways
  • 24×7 IT-level phone support
  • On-premises licenses
  • Control and management features

For organizations not yet ready to commit to a public cloud based service offering, Microsoft will be making a private cloud offering available. Although there is not fixed size for the private cloud service, Microsoft is suggesting that this offering is best suited to larger deployments (more than 5,000 users).


Microsoft has not yet provided access to the beta release of Office 365 yet so it is not possible to provide any detail on the available online services. However it is possible to offer a general perspective of the overall service as indicated above.

The decision to make the current Office Professional Plus suite available as a subscription service through Office 365 is going to have far reaching consequences for many IT vendors.  Microsoft has been under considerable pressure from industry analysts (myself, and Gartner’s Chris Wolf included) to transition to a per-user application licensing, and this clearly represents a signification step down that road. Given this step we can expect other vendors to follow suite.  It isn’t clear if Microsoft will extend subscription licensing to all its products, but while it is possible, no one should hold their breath.

Comparison with Google Apps is inevitable, but somewhat mis-placed.  Microsoft’s decision to make the full copy of Office Professional Plus available as a subscription service will be far reaching both in terms of  the way that Office 365 creates a services continuum from browser based web applications all the way up to the full Windows Office 2010 desktop application suite, with all the functionality it offers. Google’s current capabilities as demonstrated by its web application stops a long way short of Microsoft’s implementation for Office 365, both in the breadth of services offered and the features offered by the individual applications.

Potential customers of online application suite need  give careful consideration  to the implications of the service level agreement that Microsoft are offering here. 99.9% may sound low when compared with enterprise environments offering four or five nines availability (99.99% or 99.999%) , but in reality 99.9% availability equates to a little over eight hours downtime a year. Suffering eight hours downtime over the course of a year may not appear to be that much, but that is not what Microsoft is guaranteeing here.  Rather what  they are offering is compensation if downtime exceeds that amount.  Some consideration must be given to the possibility of the business impact of lost productivity above and beyond the compensation that Microsoft will offer in the event that it fails to meet its SLA. However, there is no reason to assume that outages will occur during normal office hours.   One further point to note is that although Office 365 is a cloud-based service, applications are downloaded and run locally on the subscriber’s PC, minimizing the impact of a loss of service. It is also possible to run fully disconnected, for example on an aircraft in flight without Internet connection, with the caveat that it is obviously not possible to synchronize or share files until connectivity has been restored. Microsoft has not yet shared the fine details of how it will measure availability nor the  level of compensation it will offer should the service not be available for any reason, however it must me assumed that the level of compensation will not exceed the monthly service fee.

Posted in SDDC & Hybrid CloudTagged , , , , ,