Foley on Microsoft

The Resurgence of Big Software and Services Bundles at Microsoft

• By Mary Jo Foley
• 07/22/2016

Bundling's resurgence comes from Microsoft's hope that it can catch lightning in a bottle twice. One of Microsoft's first product bundles, its desktop Office suite, was a runaway hit. It became one of Microsoft's biggest cash cows.

Over the past couple of decades -- largely because of antitrust concerns and the ever-present threat of competitors playing the monopoly-abuse card -- Microsoft had shied away from bundling together disparate products. In fact, the company encouraged its own employees, partners and, in some cases, press to refrain from using the "b" word when discussing product integration and packaging.

As Microsoft's OS dominance began to erode with the rise of mobile devices, the company began to re-test the bundling waters. At first, execs did so gingerly (with bundles like the Microsoft Desktop Optimization Pack). Then they got bolder. Over the past couple of years, Microsoft began really stepping up its app and service bundling. Here's just a partial list of the results:

Azure IoT Suite: IoT Hub, Machine Learning, Stream Analytics, Notification Hubs and Power BI

Cortana Intelligence Suite: Cortana, Bot Framework, Cognitive Services, Power BI, Machine Learning, Data Lake Services, Stream Analytics, SQL Data Warehouse, Data Factory, Data Catalog and Event Hubs

Dynamics 365: Dynamics AX Online, CRM Online, Project Madeira (Dynamics 365 Financials for Business), plus integration with Power BI, Flow, PowerApps

Enterprise Mobility + Security Suite: Azure Active Directory Premium, Intune, Azure Information Protection Premium, Cloud App Security, Advanced Threat Analytics

The Office 365 Suite: Exchange Online, SharePoint Online, Skype for Business Online, Power BI, Delve Analytics, OneDrive for Business, Sway, Planner, Office Pro Plus Suite

Secure Productive Enterprise: Office 365, Enterprise Mobility + Security, Windows 10 Enterprise (including App-V and UE-V virtualization tools)

Besides trying to rekindle the magic that led to the uptake of Office, Microsoft has other reasons for bundling more of its products and services. The company is on a mission to grow active product use and consumption.

There's also the hope of upselling users. Microsoft has been working to leverage the freemium business model across its products, via customers who purchase more feature-rich versions of products after trying the free ones. By moving more of its products -- like Enterprise Mobility + Security, Secure Productive Enterprise and Dynamics 365 -- to the kinds of tiered plans it has used to sell Office 365 (E1, E3, E5), Microsoft is turning the upsell crank further.

Looking across some of the company's recently assembled suites, it's interesting to note the prevalence of Power BI, Redmond's business intelligence offering, which is also a suite in its own right. The company already offers a free, entry-level Power BI tier, as well as a $9.99-per-user-per-month tier. Microsoft strategists seem intent on making Power BI and other Microsoft data-platform services as indispensable as Excel to many business users.

Bundles like Redmond's consumer-focused Work & Play (which combines Office 365 Home, Xbox Live and Skype WiFi) are about convenience. They're meant to try to get customers who use only a particular Microsoft product or two to try something new. They're an attempt to both expand and deepen Microsoft's customer base.

Bundling also is key to Microsoft's goal to make more of its products available as subscription services with recurring, more predictable revenue streams. The company's recent renaming and repackaging of its Windows 10 Enterprise SKU (now known as Windows 10 Enterprise E3/E5) is a prime example. While Windows 10 Enterprise already was, at least when licensed per-user, for all intents and purposes, a subscription service, Microsoft is agitating to make it even more so by bundling the OS with security services and Office 365.

I'm waiting and watching for even more and bigger bundles as Microsoft's fiscal 2017 unfolds.