For anyone doubting Microsoft’s ability to transition its big money Office product to a subscription based cloud service, the company announced its latest figures for Office 365 subscribers – and with the 70 million commercial subscribers announced today and the 23 million consumer subscribers previously published its a very healthy number indeed.
With an average annual subscription to Office 365 costing $100 that amounts to an annual revenue of close to $10bn.
However we’re still not entirely sure of the cost of acquiring that business. For example subscriptions through the Apple Store cost Microsoft 30% of its revenue, plus there are the costs of providing the 1TB of OneDrive storage it offers Office 365 subscribers, amongst others.
Still, it sounds like a pretty profitable business for Microsoft, and as long as Office remains the business standard productivity suite it will likely remain that way. However in the same way that the US economy is reliant upon oil trading in US dollars, Microsoft is reliant on big business and, in particular, governments continuing to trade documents in its software. If either were to change neither would be in a very good position.