Microsoft Announces Major Changes to Office 365 for Small and Midsized Businesses

In October, Microsoft will replace its Office 365 subscriptions for small and midsized businesses with versions that are more affordable, more flexible, and provide more value. Existing customers will be able to take advantage of the new offerings—and the new pricing—starting October 1 or when they upgrade in the months ahead.

The changes impact Office 365 Small Business, Small Business Premium and Midsize Business only, though if I understand this correctly, one of these plans is also a replacement for Office 365 ProPlus. The current Enterprise plans will remain the same, as will the consumer-oriented versions.

"Office 365 will be evolving over the next few months," Microsoft Office general manager Kirk Gregersen said. "We will release three new Office 365 plans tailored to meet the needs of small and midsized businesses, ranging from 1 to approximately 250 employees. This new lineup will replace our current plans for small and midsized businesses over time."

The three new plans are:

Office 365 Business Essentials. This replacement for Office 365 Small Business provides the core Office 365 cloud services—Exchange Online-based email and calendaring with 50 GB of storage, SharePoint Online-based cloud storage and file sharing, Lync Online-based online meetings, IM, and video conferencing, Office Online, and more. It will cost $5 per user per month ($60/year), the same price as Office 365 Small Business today, but is a better value thanks to the inclusion of additional services like Yammer and Active Directory support, and a new cap of 300 users, up from 25 before.

Office 365 Business. This replacement for Office 365 ProPlus (I think) provides access to the full Office applications—Outlook, Word, Excel, PowerPoint, OneNote and Publisher—along with 1 TB of OneDrive for Business cloud storage. It will cost $8.25 per user per month ($99/year), a savings of $45 per user per year, and has a cap of 300 users. You might think of this offering as a replacement/combination of both Office 365 ProPlus and the standalone version of OneDrive for Business.

Office 365 Business Premium. This replacement for Office 365 Small Business Premium and Midsized Business provides everything in both Office 365 Business and Business Essentials, so it's the full suite of online services plus Office and the OneDrive for Business storage. It will cost $12.50 per user per month ($150/year), a savings of $30 per user per year over Office 365 Midsized Business (and the same price as Small Business Premium today). And it is a better value thanks to the inclusion of additional services like Yammer and Active Directory support. (The 300 user cap is unchanged for Midsized Business, but up from the 25 user limit in Small Business Premium.)

Customers on each plan will now be able to upgrade to Office 365 Enterprise plans as their businesses grow, Microsoft notes, adding a new level of flexibility. You will also be able to migrate between a different small- and midsized Business plans, or add solutions like Project, Visio, Dynamics CRM Online and more.

So what about existing customers?

For now, those on Office 365 Small Business, Small Business Premium and Midsized Business have nothing to do: The new plans won't go into effect until October 1, and if you have to upgrade before that, you will simply upgrade to your existing plans normally, pay the current prices in the interim, and you then migrate to a new plan on October 1—potentially saving money whenever your existing plans expires. Or... you can just wait until that plan expires. It's up to you.

Or, because Microsoft's policy is to provide 12 months of notice for any changes to a customer's core subscription, existing customers could also continue using their current Office 365 subscription(s) until their first renewal after October 1, 2015. That means it is theoretically possible for someone to be using a now-deprecated Office 365 Small Business, Small Business Premium or Midsized Business subscription until ... wait for it... the end of September 2016.

That said, given the smooth transition between new and old here, I'd be surprised if many customers didn't just upgrade whenever they were able to. It's not like there's any downside to doing so. Indeed, both those on Office 365 Midsized Business, in particular, will save a lot of money by moving to the new Business Premium plan.

Microsoft promises more details at its Partner Conference, which is next week in Washington D.C. As a big fan and customer of Office 365—I subscribe to both Office 365 Home Premium (for the family) and Office 365 Small Business Premium (for work)—I'm very interested to both understand what's happening here and be able to communicate it effectively. Let me know if you have any questions.