I wrote the other other day that Microsoft’s Satya Nadella seems to have turned the corner on a new price strategy for Windows and Office: he’s heading towards free (see Microsoft accepts the inevitable, takes first steps toward making Windows and Office free). As I said, Nadella realizes he must trade the promise of continued revenue from Windows and Office with the reality of remaining relevant.
The strategic shift on Office will be to give away the applications for (functionally) zero, so long as the user has signed up for a monthly subscription at Office 365. In effect, Microsoft wants people to share through their infrastructure, and not through the infrastructure of competitors like Apple, Google, Dropbox, Box, and others.
The newest indication of this policy is yesterday’s announcement by Microsoft for Office 365 Personal:
Coming this Spring, Office 365 Personal is a new, great option for people interested in using Office 365. It’s designed for an individual, allows for one PC or Mac and one tablet to be connected to the service and will be available for $69.99 USD/year or $6.99 USD/ month (ERP)1. We recognize that there are households of all shapes and sizes and we’re committed to delivering the right Office for everyone – whether that be one person or an entire household.
Office Home Premium will now be called, simply, Office Home. And we can expect that Home and Enterprise versions will trend toward this model: the apps are free so long as you sign up for the monthly service, and as your move up from Personal to Home, and Home to Enterprise there will be more connection and integration options — like Sharepoint, Yammer, and business intelligence capabilities — that will justify enterprises paying over $150/year/seat before discounts.
But the apps will become free, and the war becomes what’s in the infrastructure.