Microsoft, the world’s most valuable company, is facing criticism from its customers due to its increasing demand for additional payment for accessing its services. This trend of paid add-ons is a concerning development in the industry, as it means customers have to pay more on top of their subscription fees.
According to analysts at Directions on Microsoft, the number of add-ons available for the base E3 or E5 subscriptions has grown fourfold in the past four years. In 2019, there were 14 add-ons, but by the end of 2023, this number had increased to 61. This means that customers are expected to shell out even more money for the full range of services.
The base E3 and E5 subscriptions themselves are already quite expensive. Depending on the agreement with Microsoft, an enterprise can expect to pay around $36 (£33.10) per user per month for an E3 subscription or $57 (£52.40) per user per month for E5. While these subscriptions include some productivity applications and security services, there are still many essential components missing.
Mary Jo Foley, an expert at Directions on Microsoft, acknowledges that Microsoft continuously introduces new features and apps as paid add-ons for Microsoft 365 customers. However, this approach has resulted in dissatisfaction among customers, who liken it to buying an expensive toy without the necessary batteries.
Analyst Michael Cherry points out that the cloud was once hailed for its promise to lower IT costs, including hardware, software, and headcount. However, cloud vendors like Microsoft are now introducing significant new costs for enterprises.
In the past, businesses could simply purchase perpetual licenses, but Microsoft has been urging a shift towards a subscription model. This has led to legal battles against the company in the UK.
While Microsoft argues that the availability of add-ons allows customers to choose only the services they need, many feel that this strategy is merely a way to nickel-and-dime them. Furthermore, Microsoft’s inclusion of AI and Copilot in its offerings suggests the potential introduction of another tier, like E7, which would likely come at a higher price. The Directions team speculates that such a bundle could be on the horizon.
During budgeting time, IT departments will have to decide whether to continue with costly add-ons or explore the possibility of a bundled subscription. The decision will depend on their willingness to take risks with their budget allocations.
The source of the article is from the blog mgz.com.tw