As Microsoft has added more consumer subscribers to the rolls of Office 365, the amount of revenue per subscriber has fallen, according to estimates based on the limited information the company releases.
The downward trend in revenue-per-subscriber hints at a significant shift to the less expensive rent-not-own plans available to consumers, such as Office 365 Personal, a $69.99 annual deal that provides one Office license for a personal computer and one license for a tablet.
In the fourth quarter of 2014 -- the most recently reported -- Microsoft said it had 5.7 million more paid subscribers than the same period the year before, and that revenue had increased year-over-year by $97 million.
On average, then, each of the 5.7 million additional subscriptions generated $17.01 during the quarter. But because Microsoft recognizes that revenue over the period of a subscription -- in other words, in four equal allotments in the course of a year -- those subscribers were each worth an average of $68.04 ($17.01 X 4) annually.
That was the lowest amount over the last four quarters, according to the figures Microsoft has provided in its filings with the U.S. Securities and Exchange Commission (SEC).
For example, in the third quarter, the average per-subscriber revenue was $19.02 (or $76.08 for a year), while the second and first were $25 ($100 annually) and $22.27 ($89.09), respectively.
(Jan Dawson, chief analyst with Jackdaw Research, provided revenue estimates for the June quarter, as Microsoft closed its fiscal year 2014 at the end of that quarter, and so used its SEC filing to spell out the year's numbers rather than those for the three-month stretch.)
During the year, Microsoft's average per-subscriber revenue from its consumer Office 365 plans dropped 24%.
Admittedly, Computerworld's calculations are sketchy: They only account for the year-over-year growth in both subscribers and revenue, and so don't provide a complete picture of the average revenue for all subscribers. Also in play are Microsoft's number rounding and the fact that consumers are subscribing throughout each three-month stretch, leading to potential artificial fluctuations if, say, more customers sign up near the start or end of a quarter.
The latter may have been the cause of the second quarter's uptick in revenue per subscriber. Office 365 Home, which debuted in late January 2013, only began collecting significant numbers of subscribers in the June quarter. If most subscribed early in that quarter, then renewed a year later, in Q2 2014, the revenue would have skewed higher since more than the usual number would have paid throughout most of the period.
Office 365 Home gives buyers the right to install the Office suite on up to five Windows PCs or Macs, and on as many as five tablets. It lists for $99.99 annually or $9.99 monthly.
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