However, it hasn't all been rosy. Many OLSB customers, faced with a recent deadline to migrate to Office 365 or to another website and email hosting provider, complained that Microsoft could have made the transition smoother. In discussion forums, blogs, and other outlets, upset OLSB users said Microsoft should have automated and handled more of the work and provided migration tools, especially to transfer websites.
Similar complaints have been voiced by some BPOS customers regarding their move to Office 365. BPOS was aimed at midsized and large companies and included online versions of SharePoint, Exchange, and Lync based on their 2007 editions. It also lacked Office Web Apps, the Office online version. By contrast, Office 365's components are based on the newer 2010 editions of the products.
"Yes, I heard from some smaller businesses I've talked to that Microsoft could have done more to automate the migration process," said Michael Fauscette, an IDC analyst. "Microsoft could have made it easier."
With the recently launched Office 365 for Education, schools and universities that have been using Live@edu will have to engage in a similar transition over the next 18 months or so, so it remains to be seen whether these customers also raise objections to the process. "You'd hope that Microsoft has learned from the feedback it's gotten about this over the past year now that the Live@edu migrations are starting," Fauscette said.
Because Office 365 was designed to work in hybrid cloud/on-premise environments and to thus be able to interact with on-premises instances of Outlook, SharePoint, Office, Exchange, Lync, and other Microsoft products, it often requires on-premises upgrades to desktop and server-side software.
The statistic that more than 90 percent of Office 365 customers are small businesses also raises the question of whether Office 365 has been successful in a different but critical mission: Protecting Microsoft's vast installed based of Exchange/SharePoint/Lync/Office on-premises customers as they move to a cloud model for email, productivity apps, and collaboration.
"Every CIO in the world is looking at a cloud strategy," Webster said. "Microsoft needs to be able to answer 'Yes' when they ask if Microsoft can help them move to the cloud."
Anecdotal evidence suggests mixed results in this area for Microsoft.
In January, Spanish bank Banco Bilbao Vizcaya Argentaria announced its plan to roll out Google Apps to its 110,000 employees, a project that involves turning off various on-premises email systems, including Exchange, which was used by about 35,000 employees in the company's headquarters. Unsurprisingly, Google trumpeted the win, saying that when completed, the implementation would be the largest to date for Google Apps.
In May, the U.S. Department of the Interior announced its choice of Google Apps for about 90,000 users, a loss for Office 365, which was also considered, and for Exchange, which was one of the on-premises email systems replaced. That deal was not only a business win for Google but also a legal victory because the company sued the agency in 2010, alleging that the contract requirements favored Microsoft unfairly.
Simultaneously, Microsoft has also counter-punched, landing its share of large Office 365 contracts. "Office 365 has been at least moderately successful in protecting Microsoft's customer installed base," said industry analyst Michael Osterman from Osterman Research.
The executive branch of the Minnesota state government is an example of a customer that has followed an ideal path for Microsoft. It consolidated about 40 disparate email systems into a single on-premises Exchange 2007 platform and later moved its about 40,000 users to Office 365.