Microsoft Details Coming Changes To Office 365 SMB Lineup, Boosts Seat Limits For Existing Customers

Microsoft will shake up its Office 365 small and medium business lineup this October, adding three new versions as it begins retiring three others in an effort to make it easier for customers to choose what they need.

Microsoft will roll out three new plans -- Office 365 Business, Office 365 Business Essentials and Office 365 Premium -- on Oct. 1 that will replace its Small Business, Small Business Premium and Midsize Business versions of Office 365, Kirk Gregersen, general manager of Microsoft's Office division, said in a blog post Wednesday.

Office 365 Business, priced at $8.25 per user monthly, includes the full Office suite of apps but does not come with Exchange, Lync, Sharepoint or Yammer. It also lets users install Office apps on up to 5 Windows PCs or Macs and access them from smartphones, Windows tablets and iPads.

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Office 365 Business Essentials, which is $5 per user monthly, includes Exchange, Lync, Sharepoint and Yammer but doesn't come with Office apps.

Office 365 Business Premium is $12.50 per user monthly and includes Exchange, Lync, Sharepoint and Yammer, as well as Office apps and rights to install them up to 5 PCs.

Customers currently using Office 365 Small Business, Small Business Premium and Midsize Business versions can continue using them until Oct. 1, 2015, Gregersen said.

Customers will have to switch to one of the new plans after that date. Office 365 Small Business customers will switch to the Business Essentials plan, while Small Business Premium and Midsize Business customers will move to Office 365 Business Premium.

In the meantime, Microsoft is cutting prices and adding features for customers using the existing Office 365 plans. Office 365 Small Business and Small Business Premium customers, who currently have a 25-seat limit, will see that rise to 300 seats on Oct.1, Gregersen said in the blog post.

Office 365 Midsize customers won't be getting additional seats because they already have a 300-seat limit, but Microsoft is cutting its price from $15 to $12.50 per user monthly, Gregersen said. Existing customers will get that discount on renewal, while new customers will get it starting Aug. 1.

NEXT: Microsoft Partners Weigh In On Coming Office 365 Changes

Steve Tutino, president of Ann Arbor, Mich.-based Microsoft partner Ipanema Solutions, called the changes "a great incremental move" that looks even better now that Microsoft is giving all Office 365 customers 1 terabyte of file storage.

Reed Wilson, founder and president of Palmetto Technology Group, a Greenville, S.C.-based Microsoft partner, also sees the new Office 365 options as a positive for customers.

However, with more options comes the potential for confusion, which is why it's important for Microsoft partners to do a thorough analysis of their customers' needs to make sure they sign up for the right Office 365 plan, Wilson said.

Paul DeGroot, principal analyst at Camano Island, Wash.-based Microsoft licensing consultancy Pica Communications, thinks it's good that Microsoft is no longer branding these Office 365 options by market segment.

"Terms like 'small,' 'midsize' and especially 'enterprise' really aren't meaningful to customers or to any understanding of the capabilities of the product," DeGroot told CRN. "In some cases it just means 'We've placed licensing restrictions on it.'"

At the same time, Microsoft still doesn't seem to understand the impact that changing product names have on its customers, who must spent time figuring out which new options are best for them.

"Changing names creates sales friction; offering multiple bundles -- each of which has to be reviewed, understood, compared, etc. -- triples or quadruples the sales friction," DeGroot said.