Office 365: Bait-and-switch for free Office Live Small Business customers?

To Microsoft, it's simply an evolution of their existing services to something better. Offering more value for customers, so they say. Recall the launch of Microsoft Office Live way back in late 2006, right about when Vista was being readied for the masses. Upon its launch, it promised a no-frills service for small business to take advantage of for free. Office Live Basics offered a company domain name, a site with 500 MB of storage, 25 company email accounts, company instant messaging, and tools to create and promote their site. All for free. Great news for businesses running on limited budgets - and besides, they could use all the help they can get.

The service had two major components to it. There was Office Live Workspace, and Office Live Small Business. The former allowed documents to be stored in what we would now deem as "in the cloud," although you had to open documents in Microsoft Office to edit them. Live Workspace was not restricted to just small businesses - individuals were free to take advantage of the 5 GB of storage offered.

Since then, Live Workspace was closed last year in December, and Microsoft moved over all documents to their consumer-oriented collection of Windows Live services, placing them on SkyDrive. It was a notable upgrade, as Microsoft now offered an editing solution built into web browsers, instead of solely relying on users to have Office installed. The move came as Google Apps became known for offering a collaborative office solution popular amongst businesses, individuals, and students.

What about the latter component, Office Live Small Business? You might recognize some of the same services being offered in the recently launched Office 365 beta. Not surprising though, as Microsoft has made it clear on the Office Live site that Office Live Small Business will cease to exist this coming October. Not a bad move, right?

Unfortunately, not so if you were one of those businesses counting on the free services to continue. There is no free equivalent in Office 365. Businesses are given three months of free service if they elect to switch to Office 365, but beyond that, it's standard pricing. Office 365 offers more than its predecessor, but at a cost of $6 per user. Say there are up to 25 employees, one for each email account offered for Office Live Basics. 25, by the way, is also the maximum number allowed under Office 365 for small businesses. They are now looking at up to $150 per month. Consider that Office Live Premium was $39.95 per month at one point. It then became free in February 2008, with the option of purchasing additional services at a business's discretion, or additional domains that were $14.95 per year. Either way, it's extra costs all around.

What about Microsoft's chief competition, Google? Small businesses could get basic collaboration and messaging services for up to 50 users for free. Even if they choose to step up to Google's premium offerings for businesses, the $50 per user per year still works out to be $12 less than Office 365. This may be the solution to expatriates of Office Live Basics, except with a major problem. Migration of their current data. Obviously there won't be an easy path to move over data on a company domain to another hosted by a major competitor. For some businesses, the only solution may be to deal with Office 365 and pay for features they did not need.

Microsoft may be providing better tools for small businesses in a more cohesive and attractive offering. But for some people, pricing is king. The competition has won on that end. And for Microsoft, they may have unintentionally created a bait-and-switch situation for small businesses who were perfectly content with a free basic service. But who knows - just as they did in 2008, Microsoft may release a free subset down the road once they see the error of their ways.

Thanks to Simon- for the small tip on the forums

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23 Comments

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I find it hard to believe that MS doesn't have a backdoor to your data for "security reasons".
Plus exchange may be king in the corporate environment but in a small business with less than 25 employees it adds far less value.

IMO MS has this all wrong. Sharepoint is overkill for most small businesses and most of the needed functionality can be replaced with free tools.
Forgive me if I am wrong but office web apps does not seem an adequate replacement for the desktop suite so small business would end up paying for that too.
Email, calendaring and web authoring can be done free with google apps for up to 50 employees.
IM can be done with google apps using a jabber client.
Multiple users editing the same document is a tangible advantage. However, collaboration can be achieved with cloud storage solutions like dropbox.
The only killer feature appears Microsoft Access in the cloud, so I guess it depends how much this app is used remotely for it to be worthwhile.

fpd said,
IMO MS has this all wrong. Sharepoint is overkill for most small businesses and most of the needed functionality can be replaced with free tools.
Forgive me if I am wrong but office web apps does not seem an adequate replacement for the desktop suite so small business would end up paying for that too.
Email, calendaring and web authoring can be done free with google apps for up to 50 employees.
IM can be done with google apps using a jabber client.
Multiple users editing the same document is a tangible advantage. However, collaboration can be achieved with cloud storage solutions like dropbox.
The only killer feature appears Microsoft Access in the cloud, so I guess it depends how much this app is used remotely for it to be worthwhile.

If you have any real world experience with the Microsoft products in a corporate setting or in a setting where you got to enjoy the features their products offer, you would find your comparisons funny in retrospect.

You even say this a bit yourself, calling the server services 'overkill', yet it is this power and robust feature set that has been too expensive for smaller companies to even dabble with, and people that come from corporations with these running well, find it hard to live without a lot of the features and 'overkilll' that they go to use to having access to.

Just comparing Google Email/Calendaring with Microsoft Exchange is something most IT people would laugh you out of the room for even mentioning. And this doesn't even include the Office 365 added features on top of the base Exchange server.

(And this is not even mentioning the Google security issues, where your corporate data if entrusted to them can be accessed and read by their engineers - in contrast to Microsoft's servers where your data couldn't is a mass of encrypted bits that NO ONE at Microsoft can access or read. Since Google admits their engineers can read all your stored data, do you really trust their employees enough with your corporate or business information? How about just one bad Google Engineer digging through all the corporate and business stored email to find some hot tips on products purchases and trends to know what stocks to buy, or hundreds of other ways just reading through small business emails/calendars could be used for nefarious reason or personal gain. I rather like the idea that when my data is store on any Microsoft server, whether it is hotmail/live skydrive or Office 365, and know for a fact that no person can read it.)

Most schools I know use Google Apps because of the price mainly, but it also does everything most people need. What do We would have to pay $600/month to use Office 365. That's $7200 a year for the same thing we get for free from Google Apps. We will have to pay $600 for archiving with Google, but that's about what we pay now.

What can Office 365 give me that actually makes that worth it?

Umm, not even close...

There is no bait and switch going on. For it to be 'bait and switch', the Office Small Business users would have been 'sold' something in the first place.

As a former Office Small Business user, we were told last year that it was all changing and going away. This is not 'new' to the customers that you are saying were victims of 'bait and switch'.

Additionally, as a 'customer' we had this information and were 'ok' with it a long time ago, without the prospect of all the new things being added with Office 365, which is actually a nice surprise, and far beyond what we assumed was going to happen.

As a 'free' Office Small Business user, you got very little in return, as it was basically a free domain name that you could use the Hotmail/Live email and web interface with, and a bit of free web space. The domain was 'nice' but wasn't special. The hotmail/live was nice, but was just like signing up for a @live or @hotmail account, as it still included ads, etc. The web space was nice, but not very functional, even server side scripting was a mess, let alone any advanced web sites that need databases and more functionality.

You can essentially match the 'free' features by using the free consumer 'Live' features: email, online storage space, collaboration, Office online, etc... In fact if you use Live Essentials along with the online Live services, you can do more. (The web hosting was so basic it was worthless, and the only feature truly lost.)


As a customer that had a good relationship with several of the Small Business and Office Online teams, I see this as the opposite of bait and swtich.

Why? Well, Microsoft has stepped up and is offering access to a lot of their better enterprise solutions to everyone, without huge hosting costs or server costs, which is great for the smaller business and users that would have used the 'free' service in the past.

So people and companies that have never had the 'luxury' of using some of the more impressive Microsoft enterprise/corporate level server solutions now have a simple and cheap way to experience, and use them, along all the other features added to this service.


And by comparing this to Google's offerings, I think the author was drinking to even find them in the same class. Google's offerings are not even close to what Live Online and Office Online offer to people for free everyday, which is a long way from the features and functionality of what Office365 has.

It would be like complaining about the cost to buy a fuel cap for a Corvette with a lock, and then suggest that people go trade in their Corvette for a Moped or Vespa Scooter because they have a free lock on the fuel cap.

(Google services being compared to Microsoft's enterprise offerings is just funny. Maybe you should have just started out the comparison with, "A guy and donkey go into a bar...", so we would be prepared and not spit our coffee out in laughter when we saw this comparison.)

thenetavenger said,

You can essentially match the 'free' features by using the free consumer 'Live' features: email, online storage space, collaboration, Office online, etc... In fact if you use Live Essentials along with the online Live services, you can do more. (The web hosting was so basic it was worthless, and the only feature truly lost.)
As a customer that had a good relationship with several of the Small Business and Office Online teams, I see this as the opposite of bait and swtich.
Why? Well, Microsoft has stepped up and is offering access to a lot of their better enterprise solutions to everyone, without huge hosting costs or server costs, which is great for the smaller business and users that would have used the 'free' service in the past.
So people and companies that have never had the 'luxury' of using some of the more impressive Microsoft enterprise/corporate level server solutions now have a simple and cheap way to experience, and use them, along all the other features added to this service.
And by comparing this to Google's offerings, I think the author was drinking to even find them in the same class. Google's offerings are not even close to what Live Online and Office Online offer to people for free everyday, which is a long way from the features and functionality of what Office365 has.

All of the above is what I was trying to explain in my previous comment. I think it is just insane to compare the two, and to finally have an inexpensive solution of the very powerful and flexible Office products is a plus.
Using Windows Server 2008 was nice and felt very powerful, and then came Windows Home Server and it was nice to have that for the consumer and then came Windows Home Server 2011 and it just felt like a great solution.
Through my journey of using Microsoft's server offerings, I used SharePoint Foundation 2010 and Exchange Server 2007/2010. To say it was nice would be an understatement; it's a powerful and flexible platform that isn't easy to run and has a price tag most can't afford.
With Office 365, it's really great to have that power and flexibility for so cheaply.

thenetavenger said,
As a former Office Small Business user, we were told last year that it was all changing and going away. This is not 'new' to the customers that you are saying were victims of 'bait and switch'.
Additionally, as a 'customer' we had this information and were 'ok' with it a long time ago, without the prospect of all the new things being added with Office 365, which is actually a nice surprise, and far beyond what we assumed was going to happen.
As a 'free' Office Small Business user, you got very little in return, as it was basically a free domain name that you could use the Hotmail/Live email and web interface with, and a bit of free web space. The domain was 'nice' but wasn't special. The hotmail/live was nice, but was just like signing up for a @live or @hotmail account, as it still included ads, etc. The web space was nice, but not very functional, even server side scripting was a mess, let alone any advanced web sites that need databases and more functionality.

This is what I didn't express more about…Office Live offerings were limiting and Windows Live's own products/services eventually evolved into offering the same features and more. Office Live can be easily replaced with Windows Live Custom Domains, and if you want more then it is simply time to buy a subscription of Office 365 as by that time your small business would've expanded enough to be able to afford it in their own budget.

Regardless of what any of those Office Live subscribers intend on doing, Office 365 is an incredible option to have now. If you're moving to Google Apps, then good for you, I'm moving to Office 365 so I can sport actual Office products and be more productive.

I'm not sure the author of this article realizes what is offered through Windows Live.
I have my domain name directed to Windows Live so I get my email through Hotmail, I can sync my office files on my sky drive, and I can edit my office documents from the Office Web Apps... for free.

With the Hotmail connector I can use Outlook to check my email.

What does the Office Live offer that I don't have?

Still an excellent value for the money versus what you get with the free services. Sure, I could just download Open Office (zero online service) or use Google's applications, but you miss out on the Sharepoint services, which is awesome on it's own, Exchange, and all the other goodies that the freebies just don't offer, plus retain full compatibility. No comparison.

Flawed said,
Ah the old Microsoft lockin.

Admittedly, Office 365 does cost money, and they could reduce the cost of it, just for small businesses. I fail to see it as a lockin, though. Keep in mind that most companies (yes Google, Apple, everyone) want to make some money. Just because they change their previously-freer product to a more costly one, though, it doesn't make it a lockin.

I use Google Apps free, would prefered to have moved to Office Online. I guess you can't always expect everything for free.

SK[ said,]I use Google Apps free, would prefered to have moved to Office Online. I guess you can't always expect everything for free.

office.live.com you can use word/excel/powerpoint for free

This article talks about business solutions.

I was looking into this just today and ended up going with google apps because its free. I hope MS offers a free subset of this service as well since a lot of my colleague are too used to the office software than google docs. would make it easier for me.

d4diesel said,
I was looking into this just today and ended up going with google apps because its free. I hope MS offers a free subset of this service as well since a lot of my colleague are too used to the office software than google docs. would make it easier for me.


office.live.com you can use word/excel/powerpoint for free

This article talks about business solutions.