Microsoft's emphasis on SaaS model pays off with Office 365 milestone



Microsoft Office 365, the company's group of subscription services that provide productivity software, now has about 120 million active monthly subscribers, mostly enterprise users generating more revenue for Microsoft than what's usually the case with its one-time licenses.

Last week, Microsoft revealed its milestone at driving customers to its subscription services for software,with the workplace-provided Office 365 subscription plan hitting 120 million active users.

The figure actually represents about 10% of all Office users; which several months ago, Microsoft had claimed the global Office user base has crossed 1 billion.

Microsoft's chief financial officer, Amy Hood, revealed that during the June financial period, revenue for the corporate side of Office 365 had for the first time surpassed what's generated by traditional licensing of the productivity suite.

Albeit, the company generally revealed the revenue breakdown of the two models - subscription or one-time licensing, with the latter often referred to as "perpetual" licensing.

Microsoft is perhaps making more money from Office subscriptions than from one-time license purchases on the heels of only one-tenth of the user base, which implication is quite obvious: the customers are paying more for Office 365 than they were previously for perpetual licenses.

While the never-ending payments the subscription model require - costs more than an outright purchase; for smaller organizations, they're probably saving money with Office 365, as the size of the organization determines whether savings will dwindle.

Such organizations, lacking economies of scale for internal computing operations, will likely save money and have a more efficient cost structure moving from on-premises services to Office 365.
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