Microsoft Office 365 for Businesses

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The world’s largest software maker Microsoft Corp. (MSFT) has launched its new software, Office 365 for business communities. Office 365 is a cloud-based software suite officially launched in 2011. It is offered to customers in the software-as-a-service (SaaS) format.

Microsoft launched the latest version of Office 365, based on the version of Office launched last month. It is called Office 2013 if purchased as a straight software and Office 365 Premium Home edition if purchased annually.

The company is offering different pricing plans for an annual subscription of the Office 365 suite.  For instance, Office 365 ProPlus is intended for large organizations and priced at $144.0 per user. Office 365 Midsize Business comes at a cost of $180.0 per user whereas Office 365 Small Business Premium costs $150.0 per user annually.

The new Office comes with the traditional word processing, spreadsheets and email programs that can be purchased singly or in combination.

Microsoft’s Office 365 is gaining traction in the market as it recently launched its online version focusing on touch devices. Further, it is being deployed at the stores of retailers such as J. C. Penney Company Inc. (JCP) and U.K.-based Tesco as well as government departments such as the Texas Department of Information Resources, which chose the software for inter-departmental activities.

The latest to join the bandwagon is the International Federation of Red Cross and Red Crescent Societies (:IFRC), which also signed a MoU with Microsoft.

Currently, just like other PC makers, Microsoft is also battling the slump in the PC market caused by the sluggish economy. In addition, the popularity of smartphones and tablets from Apple (AAPL) and Google (GOOG) has been cannibalizing PC market sales, further deteriorating the scenario. Whether it can come out of the slump on the back of its new software and OS is a wait-and-see game.

As per research conducted by IDC, cloud-based services may grow into a $100.0 billion market by 2016, representing a compound annual growth rate (CAGR) of 26.0%. Cloud services are expected to drive the growth in IT going forward, generating 41.0% of overall growth in IT by 2016. Thus, the strengthening of Microsoft’s position in the segment is encouraging, as the PC market is showing no signs of revival in the near future.

Microsoft reported revenues, excluding deferrals, of $21.46 billion in the second quarter of fiscal 2013, which was up 34.0% sequentially and 2.7% from last year, in line with our estimates. All except the Entertainment & Devices segment grew both sequentially and from the year-ago quarter. Entertainment & Devices were down year over year.

Microsoft has a Zacks Rank #3 (Hold).

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