Microsoft thinks bundles are great and customers love them

Rivals and regulators might disagree, so might users that are paying for software they don't need

It's always interesting to see how technology executives crop their marketing messages to suit the audience.

A case in point is Microsoft's Jared Spataro, corporate veep of Modern Work and Business Applications, who just weeks ago was talking up product bundles in terms of how valuable they are for Microsoft and customers that "move up the stack."

The exec, who was speaking to institutional investors at Morgan Stanley's Technology, Media and Telecoms conference in early March, said Microsoft is working to get more business clients signed up to the all-encompassing licenses that include productivity apps, analytics, security, and compliance services.

Asked about migrating more folk onto E1, E3, and E5 licenses, Spataro replied: "We think of this as average revenue per user … kind of moving people up the stack for us, and we would still say that there's a lot of room, early days."

As of 18 months ago, "we were 12 percent penetrated with E5 in the Office 365 base," he added. "Man, there is still a lot of opportunity there for us."

"We tend to think of our ability to first secure the license, and then from the license to upsell to increase the average revenue per user. And that's a motion that we do very well."

Most Reg readers will be familiar with this sales motion, even if they are not directly negotiating with a Microsoft salesperson.

How does Microsoft upsell to generate more revenue per user? "Security is really the big driver," said Spataro, "but there are other components that make it economically make sense for customers. So those include things like analytics."

On bundling more products into specific licenses, he said: "We call it 'do more with less' and it's our ability to go in and say, 'why pay multiple vendors what you could pay one vendor at kind of a discounted price?'"

Perhaps because customers don't want or need to pay for all the software included in a bundle, but it's not just end users who might have an issue.

That push to include more products wrapped in a discounted price has already caused a stir among antitrust regulators in the European Union. Slack complained of Teams being bundled with Office 365 and Microsoft 365 in 2020 and that culminated in a change in October and this week.

Staring down the barrel of a deep probe from the EU, Microsoft last summer agreed to regionally unbundle Teams from O365/M365. Although with millions of users already using Teams, the damage to rivals was arguably already done. At last count, Microsoft Teams had 280 million users and Slack had 47 million.

This week, Microsoft made a global update to its licenses, letting customers buy the productivity suites without Teams, buy Teams as a standalone product, or to continue to buy it as part of the bundle.

So bundles are a useful sales and marketing tool for Microsoft, but El Reg wonders if the tone the company adopts when talking to antitrust teams differs somewhat from the chord struck by Spataro last month in front of investors. Quite possibly. ®

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