Businesses are the One Percenters in Microsoft's Freemium Model

Businesses are the One Percenters in Microsoft's Freemium Model

A lot has come out in the past few days over Microsoft's intent to change its business model around freemium. Basically, the company will offer its operating systems and applications as free-first, supplemented by subscriptions for those that need more than a freemium solution can provide. This is great for consumers and clearly evident already in how Microsoft is delivering Office 365 across multiple platforms. Microsoft calls is consumer flexibility and suggests that there's value in offering free, basic mobile app experiences for general users.

But, as with the earlier Windows 10 announcement, businesses are not included in this freemium model. In a blog post today related to Office 365, Microsoft sums it up this way…

In the professional world, we’ve approached things differently. These users require more than simple apps: Organizations need an integrated product suite. They need security and reliability. And most of all, they need to be able to get things done, wherever they are.

On one hand, this makes sense. Yes, businesses do, most times, need more than what Microsoft is willing to offer those it considers in the consumer bracket. But, what exactly do they need beyond the basics and do they need it all the time? Microsoft seems to suggest that it knows. The company has had a tough time the last few years figuring out what customers actually wanted/needed, so how does it all-of-a-sudden become an expert aficionado? And, when did security and reliability become a business-only feature?

Businesses leaders groaned when it was announced that Windows 10 would be free for everyone except companies. And they groaned ever louder when it was recently stated that it will be a free upgrade for those with unauthorized copies of earlier operating systems, particularly in China. Is Microsoft really in tune with what companies need, or does it just need money to subsidize its free programs? Those with money pay for the programs of those that don't. Why does that sound familiar? Businesses are the one percenters in a freemium world.

But, where's the cut-off?

I use Excel, but not a lot and not proficiently. However, I have a lot of experience with Word and PowerPoint and spend about 50% of my day inside Word, the rest in Outlook. I'm obviously not a business, but I do need business-type functionality sometimes. In a way, it seems Microsoft is catching the Cable TV wave – even though Cable TV is dying on the vine due to this same exact problem. I can buy basic cable, but if I want even one or two additional channels, I have to buy a bigger package full of programming most of which I will never watch.

Additionally, Microsoft uses another factor in determining free versus business: mobile.

It says…

Based on our research, we are classifying anything with a screen size of 10.1 inches or less as a true mobile device: You’re probably using it on the go, when it’s not practical to use a larger computing device such as a PC or a Mac. You probably aren’t using a mouse or a keyboard, instead navigating via touch interface. It’s probably not a “pro” category tablet that is used for design or presentations. On these devices, the core editing and viewing experience is free, until you get to those premium, subscription features.

If you use a mouse and keyboard, you're a business. It all makes sense now. Business users use keyboards.

It'll be interesting to see how this plays out and how Microsoft continues to clarify the boxes it puts each category of user in. Software licensing continues to be one of the most feared and hated repercussions of Microsoft's offerings and this isn't making it any easier to swallow. If you're a Freemium user, take some time to thank a business user today. Can't find a business user? Look for a keyboard.

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