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Microsoft jacks price of top-tier Office 365 plan by 59 percent

Gregg Keizer | Dec. 3, 2015
Analysts argue Office 365 Enterprise E5 -- and its telephony upside -- will appeal to small- and mid-sized businesses.

"There's definitely a class of customer who will look at [E5] for enterprise-class voice," said Miller in an interview. "E5 is really about enterprise voice. It's an overall enterprise offering, not that E3 isn't, but E5 is their top-tier offering. There's definitely an opportunity to upset [telephony]."

Typically, said Miller, enterprises have subscribed to Office 365 Enterprise E3 for the Office suite and Microsoft's cloud-based Exchange email, then added a third-party product for corporate calling and conferencing. "So there's a lot of space for E5 to expand into."

Miller's colleague at Directions, Andrew Snodgrass, had a narrower market for E5 in mind, at least over the short term.

"Conferencing is the thing that most people will take up quicker than anything else," Snodgrass said, referring to PSTN (pubic switched telephone network) conferencing, one of the components that separates E5 from the lower-priced E3 and still-available-for-seven-months E4. Previously, companies that wanted the ability for workers to dial into video meetings and conferences required a third-party solution.

"It's just a real convenient tool," Snodgrass added of PSTN conferencing. "Enterprises have been hammering on this for a long time. It's a no brainer for many. They've had the service, but it was composed of multiple components, and no one knew who to yell at if it didn't work."

Small- and mid-sized businesses best bet for E5

E5 and its most-publicized pieces -- the PSTN conferencing, cloud-based PBX (private branch exchange), and the optional PSTN calling -- will be most appealing to small- and medium-sized businesses that don't have a PBX phone and/or conferencing system, Snodgrass argued. Microsoft will find it much harder to convince larger firms that may have spent millions on their PBX system to dump investments and switch to E5's cloud alternative.

"If I'm an enterprise, I'm not going to go half-way in [to a PBX swap]. But if you go all-in on cloud PBX you have to retire the on-premises system," Snodgrass pointed out. "That takes a lot longer, that's a multi-year plan."

And potentially very expensive if, for instance, a company only recently rolled out a new PBX system, meaning that a change would require tossing aside a multi-million-dollar investment. Down the line, when enterprises committed to Office 365 have gotten their money's worth out of their existing telephony platform, they may be more amendable to taking up E5, Snodgrass said.

Some companies might find E5's cloud-based PBX -- and the associated PSTN calling that Microsoft offers as an add-on -- intriguing for deployment in far-flung branch offices. "It might be good for a business with a lot of small sales offices. Now all of a sudden you don't have to set up independent plans [and PBX systems] for each office."


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