Microsoft significantly changes Office365 licensing

Microsoft, as Microsoft is want to do, has again changed the rules for Office365 licensing

This has ramifications for both existing and new clients

In a move that has both advantages and disadvantages for consumers of Office365 products, Microsoft has shuffled the licensing for Office365 significantly, introducing a new product mix, and changing the way existing product mixes work. This has ramifications for both new and existing customers so best to be sure you understand it.

First the good

Increased max count

In the old office365 world there were small business licenses up to 25 users, and midsize business up to 150.  These numbers have fluctuated and changed over time and the result has been very confusing.  They have done away with this distinction now.  All businesses up to 300 licenses can purchase the small business line of products. This makes it much easier for a company to carefully craft a set of licenses that meets their needs, and opens up the market for the less expensive licenses for many midsize businesses who could not utilize them in the past due to cost constraints of the more expensive midsize and enterprise business license.

Mixing and matching

In the old Office365 world you could not mix and match small business, midsize business and enterprise licenses.  This caused untold consternation when you exceeded the max licensing, or needed a product for one or two clients out of your install with more advanced features. This is no longer the case - you can now mix and match both small/midsize business and enterprise licenses. They have removed the Small/Midsize division and made ONE product line called "Small Business" and ONE product line called "Enterprise".   Companies cannot own more than 300 instances of a Small Business license, Enterprise licenses are unlimited in the number you can buy.  So you can now mix and match and choose products from any of the business lines as needed, as long as you don't exceed the max license limit in any one line.  This is a real bonus as they have also changed the way offline office works so that in some cases you may be required to purchase enterprise licenses now.

License office without email

Some businesses wanted the ability to license MS office on an ongoing basis without paying for an email box. They might already have an internal email server, or are using a different product for email.  You can now - through office365 acquire an office license without online storage or email accounts.  This allows companies doing mass deployments of office upgrades, or those that don't need email to take advantage of licensing office through the cloud.  Remember that each of these licenses allows 5 installs!

More office options

In the old world you either got offline office, or you didn't and if you did get it you got the whole shebang - the full office professional with all the bells and whistles. This was different from their normal process of selling office in that they had tiered the product - with a lower end offering that didn't include Access and InfoPath, and a higher end offering that included these products. The good news is that they now offer an office small business and an office enterprise - distinguishing these products from each other. The bad news I will cover in the next section.

1TB of storage in the cloud

Microsoft now offers ALL office365 email users 1TB of offline storage. That's 1000GB of storage in the cloud PER MAILBOX. That's an unprecedented amount of space, which any user uses. At the $5/month $60/year level you can't even buy that much storage from Amazon Web Services or Azure for a year - without the mailbox.  It's a bold move and one that may spell (for professional use) the end of products like Dropbox.

Buy Office365 from a reseller and use a PO rather than a credit card

You can now buy all but the Kiosk licenses (see below) from a reseller as an open office license. These licenses get applied to your online account, and must be re-purchased each year from your reseller - unlike the credit card accounts they will not renew automatically.  Resellers must be Microsoft Cloud Authorized resellers (Like OS-Cubed, Inc.).

The Bad News

Microsoft has made full office more expensive

If you need all office has to offer (including Microsoft Access) you have no choice now but to buy the full enterprise office at $20/month. They have replace the $12.50/month slot with the small business office which does not include MS Access. Now a lot of clients don't need Access so their price won't change they will just lose the ability to run Access on their machines. But for small business or midsize business clients who do need MS Access on their workstations they are looking at a rather hefty $7.50/month additional charge per set of 5 licenses to use this ability.  This amounts to an additional $90/year to get ONE new office app.  For many clients this is no big deal, but for those that use Access it could get quite expensive. If you had the full 25 Office365 pro plus licenses and need them all to have Access you're talking an extra $2250/year.  That's not chump change for a small business.  Note however that even at $240/year it's still an incredible deal.  You are getting full blown Microsoft Office with 5 licenses to install for the price of less than one over-the-counter license.  You are in addition getting the full-blown all access Microsoft sharepoint, 1TB of storage, yammer, lync, etc.  This is still an awesome deal. It's just too bad that they decided to screw the high end of existing small business subscribers to set it up this way.

Microsoft is not honoring their initial commitment to clients

Once your current subscription runs out - you won't be able to just renew it and continue to enjoy it's benefits.  You will have to purchase one of the new licenses and either suffer a downgrade of office without Access or pay more to get an enterprise pro license.  This sucks.  I think Microsoft should have continued to honor their initial sales of office365 pro to small and midsize businesses as long as they continued to use them.  If they want to buy NEW licenses - sure put them in the new pricing scheme. Why does this suck (beyond the obvious additional expense)?  Office365 was sold with the express idea that it would give you a predictable monthly outlay for your needs.  And then they went and removed that benefit by changing the pricing.  If they can just change (upwards) the pricing any time they want - how is that predictable? How are companies to trust them that they won't increase prices again?  I think this was a very bad move on Microsoft's part. We'll see if outcry from customers as their contracts come up for renewal pushes them to modify this policy.  The bad taste left in people's mouths from having to pay more feels a lot like a bait and switch technique.  One even wonders if attorney generals might end up getting involved.

The breakdown:

Here is the new (simplified) table of options available from Microsoft

Office small business (limited to up to 300 users):

Business essentials (no offline office, 50GB mailbox, 1TB storage, online office): $5/month
Office365 business (No mailbox, 1TB of offline storage, Office small business (no Access), no lync): $8.25/month
Business premium (50GB mailbox, 1TB offline storage, Office small business (no Access): $12.50/month

Office Enterprise (unlimited users):

Office Kiosk K1: 2GB mailbox, no offline storage, no access to sharepoint: $2/month
Office Kiosk K2: 2GB mailbox, No offline storage, Access to sharepoint, access to office online: $4/month
Office Enterprise E1: (No offline office, 1TB Storage, sharepoint, Lync, etc): $8/month
Office Enterprise ProPlus: (No mailbox, Office pro subscription with access, no offline storage, no access to sharepoint, no lync) $12/month
Office Enterprise E3: (Full office pro, 50GB mailbox, 1tb storage, access to sharepoint, lync,
yammer): $20/month

When will this affect me?

If you are a current subscriber and your yearly renewal is after October 1, 2015 you will be forced to renew under the new licensing.  Any renewals in this next year will include your old licensing. If you renew after that date you will be forced into the new licensing. If you are a small business expiring just after that date and Microsoft Access is important to your business you may wish to look into renewing early so you get another year out of the license.

If you are a new subscriber you can no longer get the old licensing plans.  You must choose one of these options. 

Summary

As you can see if you need offline Access expect to pay $20/month after your current subscription expires.  I haven't explored it yet, but it's possible if you're a small business you could buy a $5 business essentials account (for up to 300 users) and a $12 Office pro plus account (remember you get 5 installs per account) and get similar functionality for $17/month.  The only downside would be missing some esoteric and infrequently used functions such as voicemail integration, forensics and other high end exchange functions. 

Why is Hewlett Packard already lying to partners?

Hewlett Packard has announced it is splitting it's enterprise/server division off from it's consumer products division.  In this statement from Meg Whitman she claims that it will be business as usual for partners, and that nothing changes.  Unfortunately this is totally a lie.  Within days of announcing the split they also announced the fact that they were creating a set of new requirements to sell ANY HP Printer toner or ink supplies.  Partners now have to sell at least $100,000 a year in HP product to qualify to sell ink or toner supplies.  Small partners like OS-Cubed, Inc. don't do that kind of volume.  So despite a 3 company, 30 year relationship with HP and Compaq for all their products we will no longer be selling or recommending HP printers to our clients.  We won't even be able to buy supplies for the printer we own through our distributor.

Why are they doing this?  The only answer can be to drive up the cost of printer and toner to consumers.  By narrowing the competitive field for supply resale they can more closely control margins and sale prices.  By driving people to big-box stores they can push deeper discounts on the printers (many large stores sell them at a loss) because they know that their customers won't go buy the supplies at another location.

I of course can still sell the printers themselves.  But the margin on those is miniscule because, as I said big box stores sell them at a loss and make up the loss in supply sales.

I cannot fathom why HP is doing this, but it really makes me worried. I like HP, and always have. We EXCLUSIVELY sell their PCs, Laptops and Servers  and . And yet... will they now squeeze me out of sales of those products too because I'm not a high volume purchaser?  Will I be forced to find other vendors? This first move is not promising.  It's not promising for consumers either because let's face it - big box stores just don't offer the service and expertise that a small reseller can provide.

In the next 12 months we will see.  HP absorbed Compaq and there were some pretty serious disruptions when this occurred. I almost cancelled my 15 year relationship with them then, and had to escalate some issues to the vice-presidential level at HP to get them resolved. I will be watching closely and evaluating competing products, vendors and providers over the next few months.  If I see more restrictions or volume requirements on HPs part I will be (sadly) looking to change vendors. This can only hurt HP because small dealers with a lot of expertise like ours are what keep them in front of SMB clients. These clients trust us to recommend a product they can depend on - and to depend on the product we need to be able to depend on our provider - depend on them not to jerk the rug out from under us after we've been selling their product for them for 30 years.