(MSFT) Business Houses Adopt Office 365

The world’s largest software maker, Microsoft Corp. (MSFT), is gaining popularity among companies like Sensia Halsovard AB, Arysta LifeScience and SEPCOIII.

Previously, all these organizations deployed Google (GOOG) Apps for their business requirements. But they soon found it inadequate. Not only did it lack the basic offline capabilities like calendar sharing, but it was also not as user-friendly as they had expected it to be. Hence, Microsoft’s Office 365 edged over Google’s service with its unique security and privacy features and the variety of certifications of cloud-based services that it offered.

The Office 365 suite equips these organizations with advanced technologies, thereby improving operational efficiency and resource allocation. Not only does it facilitate communication and collaboration among the organisations, but it also reduces their IT expenses.

Office 365 is sold as a service, and therefore generates ongoing revenues for Microsoft instead of a one-time licensing fee. Launched in Dec 2011, the new Office comes with the traditional word processing, spreadsheets and email programs.

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 jump on the bandwagon is the International Federation of Red Cross and Red Crescent Societies (IFRC), which also signed an MoU with Microsoft. Further, Microsoft’s software is gaining ground in the healthcare sector. The company continues to innovate, launching separate versions for businesses and student communities.

Currently, just like other PC makers, Microsoft is also battling the slump in the PC market caused by the sluggish economy. In addition to this, the popularity of smartphones and tablets from Apple (AAPL) and Google are cannibalizing the 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.

Microsoft reported revenues excluding deferrals of $20.49 billion in the third quarter of fiscal 2013, which was down 4.5% sequentially but up 17.7% from last year, more or less in line with our estimates. All segments grew strongly from the year-ago quarter and declined only slightly from the seasonally strong December quarter. Microsoft’s Business Division grew both sequentially and year over year.

Microsoft has a Zacks Rank #4 (Sell).
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