Microsoft enlists Dell to push Office 365 on new PCs

Dell is only one of top three OEMs to bundle Office 365 Home Premium with new consumer computers

By , Computerworld |  Hardware

Microsoft has, of course, taken other steps to promote Office 365, especially Home Premium, which is aimed at consumers, a market Microsoft wants to shift toward a "rent-not-own" software model.

Dell bundles a 30-day trial of Office 365 Home Premium with new consumer PCs. (Image: Dell)

The company has tilted the field toward Office 365 by raising prices of the "perpetual" licenses -- those the customer pays for once, then uses as long as desired -- and by limiting rights to permanently tie those licenses to a specific PC.

Miller was unsure how well an Office 365-with-a-new-PC concept would do, including how many subscribers Microsoft would acquire and what the retention rate will be as renewal fees come due.

But by including Office 365 with a new system, particularly if the subscription is discounted rather than offered as a limited-time trial, Microsoft and OEMs may have hit on a solid strategy. "There's some deep psychology involved," Miller said, on the part of customers forced to make the decision at PC purchase time.

They're already plunking down hundreds, perhaps more than $1,000, on the machine, so an additional $80 or $100 may not be as painful then as it would seem later.

"It becomes up to the OEM to close that deal ... but I think it's easier to close that sale at the point of purchase than it would be later," Miller said.

What Microsoft would like to do is train customers to add Office to every new PC -- the restrictive perpetual license that's anchored to a single PC, and only to that PC, is one hint of its thinking -- but through the carrot of Office 365.

"Buy a new PC, tack on $100 [for Office]," Miller said, outlining Microsoft's thinking. "A year later, buy another new PC, tack on another $100 [for Office]." With that in mind, customers will start to believe Office 365 is a good deal, whether it really is. The result, said Miller: Microsoft nudges consumers to buy into a form of Software Assurance, the annuity-like program that many corporations use to keep their Microsoft software up to date.


Originally published on Computerworld |  Click here to read the original story.
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