Office 365 Launch, Android Licensing Made Microsoft's Week

Microsoft launched Office 365 this week, on top of entering into a handful of Android licensing agreements. But it also announced the death of its Hohm project.

The centerpiece of Microsoft's week was the launch of Office 365, the company's cloud-productivity platform.

A rebranding of the company's BPOS (Business Productivity Online Suite), Office 365 links Microsoft Office, SharePoint Online, Exchange Online and Lync Online into a platform that costs between $2 and $27 per user per month. In addition, Microsoft is offering an Office 365 Marketplace with productivity apps and professional services.

Microsoft CEO Steve Ballmer took to a New York City stage June 28 to roll out Office 365. "We believe effective collaboration is a lot more than good group dynamics," Ballmer told the audience of media, analysts and business owners gathered for the launch. "It's instant access to relevant information ... and the right people taking the right action at the right time."

Ballmer went on to claim the software will give small to midsize businesses an "edge" in competing, without the burden of complex (and expensive) on-premises systems. Indeed, most of Microsoft's promotional materials seem angled toward that particular audience segment, which is also a key demographic for Google Apps.

Certainly the competition between Microsoft and Google has intensified in recent months. Tom Rizzo, senior director of Microsoft Online Services, insisted in a May 17 interview with eWEEK that businesses were trying Google's business-cloud offerings before shifting back into Microsoft's camp. Google executives took strident exception to Rizzo's assertions, arguing that Google remained the leading choice for businesses interested in cloud-based email and collaboration.

Despite those broadsides, early analysts seem to think Microsoft has some distance to go before it poses a serious threat to Google's position in cloud productivity.

"While Office 365 does put Microsoft in mortal combat with Google," Matthew Cain, an analyst with Gartner, wrote in a June 28 email to eWEEK, "it is not really an existential threat for Google since Microsoft is essentially validating the model that Google pioneered with Google Apps."

Indeed, he added, Office 365 could draw added attention to Google Apps as a viable alternative. But even then, it could be some time before companies choose to embrace the cloud-productivity model: "The first ingredient we need for companies to wholly embrace cloud-based personal productivity and collaboration tools is time."

But according to another analyst, Microsoft nonetheless needs to make its consumer case sooner rather than later.

"Microsoft is struggling to show value given that Google is preaching -free,'" Rob Enderle, principal analyst of the Enderle Group, wrote in a June 27 email to eWEEK. "They need to reeducate their market quickly, but don't see this as a marketing but a product problem, and are playing Google's game as a result."

Microsoft's other big news of the week centered on Android.

Over the course of the week, Microsoft entered into Android patent-licensing agreements with three smaller manufacturers: Onkyo, Velocity Micro and General Dynamics Itronix.

For several quarters, Microsoft has pursued a stark strategy with regard to manufacturers of Android devices such as smartphones and tablets: Pay royalties, or face a patent-infringement lawsuit. Microsoft claims the Android platform infringes on a number of Microsoft-held patents.

"This agreement and similar agreements recently announced evidence the momentum and success of our licensing program," Horacio Gutierrez, corporate vice president and deputy general counsel of intellectual property and licensing at Microsoft, wrote in a June 30 statement concerning the Onkyo deal.

Some companies have chosen to embrace the royalty agreement option. In April 2010, HTC announced that it had agreed to pay Microsoft in exchange for the use of "patented technology" in its Android-powered smartphones. In the wake of that, rumors circulated that Microsoft was actively seeking similar arrangements with other unnamed companies.

However, other Android manufacturers have been willing to put up a fight. Motorola has retaliated to a Microsoft patent-infringement suit with an intellectual-property complaint of its own. And Barnes & Noble, whose Nook e-reader uses Android, filed a countersuit against Microsoft after the latter sued it for patent infringement.

The bookseller's counterclaim, filed April 25 with the U.S. District Court for the Western District of Washington at Seattle, described Microsoft as repeatedly arguing that its patent portfolio would "entirely preclude the use of Android Operating System by the Nook," and mentions that both HTC and Amazon have entered into patent-licensing deals with Redmond.

"Microsoft is misusing these patents as part of a scheme to try to eliminate or marginalize the competition to its own Windows Phone 7 mobile device operating system posed by the open source Android operating system and other open source operating systems," it read at one point. "Microsoft's conduct directly harms both competition for and consumers of eReaders, smartphones, tablet computers and other mobile electronic devices, and renders Microsoft's patents unenforceable."

Even as Microsoft launched new platforms and pursued new channels for revenue, there was a reminder that even the best-intentioned products sometimes fail.

On June 30, Microsoft announced that it will discontinue its Hohm service in May 2012. Hohm took user input about energy choices and made recommendations about how to adjust energy use to save money. Originally launched in July 2009, it was part of a larger green IT initiative that included the company's Environmental Sustainability Dashboard for Microsoft Dynamics AX, which had been released that February.

"The feedback from customers and partners had remained encouraging throughout Microsoft Hohm's beta period," read a June 30 posting on Hohm's official blog. "However, due to the slow overall market adoption of the service, we are instead focusing our efforts on products and solutions more capable of supporting long-standing growth within this evolving market."

Microsoft can only hope that its big cloud initiatives perform a little better.

Follow Nicholas Kolakowski on Twitter