Microsoft Exec: Analysts Will Be 'Shocked' When Office 365 Sales Figures Come Out

Nearly six months after the official release of Office 365, Microsoft Senior Director for Online Services Tom Rizzo says the cloud-based messaging and collaboration service is shaping up to be one of the company's fastest-growing businesses. Just don't ask Rizzo to prove it. Microsoft refuses to give any figures -- revenues or number of subscribers -- that would quantify just how well Office 365 is doing.

The on-premises versions of Office are selling quite well. Microsoft has sold more than 100 million copies of Office 2010 and 61 million SharePoint 2010 licenses. While no such picture is available for Office 365 or its predecessor, Business Productivity Online Services (BPOS), Microsoft has acknowledged that 90 percent of customers are small businesses with fewer than 50 employees.

In Part 2 of the interview (Part 1 is here), Rizzo explained why Microsoft is bullish about Office 365.

RCP: Absent any user stats or revenue reports, some analysts have voiced skepticism as to how well Office 365 is selling. Are there any measures you can share?

Rizzo: I can't share any details. The only thing I will say is I think those analysts will be shocked when we talk about Office 365 and the momentum that is actually happening with our concrete numbers. I've worked on some really great growth business at Microsoft -- Exchange, SQL and SharePoint -- and I'm amazed at the momentum of Office 365. We've only been in market since June 28 but we've been selling extremely well.

How are BPOS-to-Office-365 migrations coming along?

It is going well. It's driven by the customer pace, not by our pace, but the migrations have been going extremely well. We've tried to make sure that we continue to learn from every migration, whether it's new tools that we need or new documentation or new procedures, training, support -- those sorts of things. But the vast majority have gone pretty seamlessly, both from a customer standpoint and from a Microsoft technology standpoint.

There were some initial complaints by existing BPOS customers [and partners] who couldn't migrate right away. Is everyone able to migrate now?

A whole bunch of transitions are in progress as we speak.

"I've worked on some really great growth business at Microsoft -- Exchange, SQL and SharePoint -- and I'm amazed at the momentum of Office 365."
Tom Rizzo, Microsoft Senior Director for Online Services

You said that 90 percent of Office 365 customers are small businesses. Do you see that percentage holding?

I see that percentage holding for the short term because enterprises take longer for any sort of move. We are seeing some enterprises move, but I would expect we would see over the next year or two years. The majority will be smaller or medium-sized customers. But we will see quickly that enterprises will start to move more wholesale. Enterprises are moving -- it's more of a smaller subset of their users. They're segmenting their users, and moving a subset at first to test it out, and then moving wholesale to Office 365.

I don't expect it to stick, but SMBs make up more of the worldwide ecosystem than enterprises from a sheer number of them. [Still,] I would expect enterprises to quickly encroach on the SMB numbers in the next year to two years.

Next Page: On Advisor and Syndication Partners >>