Four years after the introduction of Office 365 for consumers, Microsoft last week said subscriptions to the productivity software had reached nearly 25 million.
Subscribers, however, were harder to find last year than in 2015, according to the numbers Microsoft reported: Additions to Office 365’s rolls were down 62% in 2016 compared to the year before.
During an earnings call with Wall Street analysts last week, CEO Satya Nadella touted revenue increases for the Office products aimed at consumers — which include Office 365 — and of the latter said that the company had, “continued to see an increase in … subscriber base. ”
That it did.
In a filing with the U. S. Securities & Exchange Commission (SEC), Microsoft pegged the number of consumer Office 365 subscriptions in the December quarter at 24.9 million, an increase of 900,000 from the September quarter and 4.3 million more than a year earlier.
Microsoft launched Office 365 for consumers in January 2013. The initial subscription — dubbed “Home Premium” — was a five-user deal that cost $100 annually or $10 monthly. Fifteen months later, Microsoft unveiled a one-user subscription called “Personal” for $70 a year or $7 a month. Since then, Microsoft shortened the original subscription’s name to just “Home;” prices have not changed.
Company executives have never publicly set numeric goals for Office 365 subscriptions. But Microsoft has made no secret about its desire to shift much of its software business model toward recurring payments rather than one-time purchases of “perpetual” licenses, because once bought the software may be used as long as the customer wants.
In each of the last three quarters, Office 365 grew by about 900,000 subscribers, the smallest quarterly increase since early 2014. Prior to the nine-month stretch of 2016, subscribers were accumulating at rates two to three times larger per quarter.
By charting Office 365’s new subscribers using a trailing 12 months — the latest quarter plus the three previous — to eliminate seasonal spikes, the suite’s waxing and waning over the past four years becomes apparent. From its Q1 2013 debut until Q4 2015, Office 365 subscriber growth was always steady, sometimes spectacular.
Subscriber additions peaked in the first quarter of 2015, at 3.2 million, followed by 3 million in the third quarter, providing a foundation for a record 11.4 million new subscribers during the year.
After Q4 2015, however, the trailing 12-month numbers fell, a decline fueled by the plateau of 0.9 million each quarter from the second onward. That resulted in a gain of just 4.3 million subscribers throughout 2016, a reduction of 62% from the year before.
Microsoft has rarely provided information on Office 365 revenue; Computerworld stopped extrapolating sales in 2015 after it became apparent that rounding errors may have skewed the results. Last week, Microsoft only said revenue from the consumer side of Office — a bucket that included not only Office 365 but also the perpetual licenses sold at retail — was up 22% in the December quarter.
The increase, the largest of 2016, was not as stupendous as at first glance, however: The comparable quarter — the fourth of 2015 — saw a revenue decline of 14% from the same period in 2014. Over a two-year span, then, from the December quarter of 2014 to the same period in 2016, the consumer Office revenue climbed by a less impressive 5%.
Additions to the consumer subscription rolls for Office 365 slumped in 2016 to 4.3 million, a 62% decline from the year before.

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The decision by President Donald Trump to impose a broad immigration ban on seven countries may have an impact he didn’t foresee.
The ban, a 90-day moratorium on admissions and re-entry in the United States unveiled on Friday, isn’t about H-1B visa-holders specifically. And it doesn’t grow out of the his voiced concerns about the use of that visa to displace U. S. workers. Instead it affects tourists, business and student visas. Those with permanent residency, or green cards, are also affected.
Trump’s ban, issued through an executive order, affects all visa types in seven countries: Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen. The action is ostensibly intended as an anti-terrorism measure. It targets some, but not all, Muslim-majority countries; Saudi Arabia, for instance, is not on the list.
Aside from inflaming civil liberties groups, sparking court fights and spontaneous demonstrations last night at various U. S. airports, the move is also giving the tech industry a renewed voice and a rallying point on immigration. This comes at the same time the Trump administration is expected to begin pushing for H-1B reforms.
Among those speaking out was Twitter CEO Jack Dorsey, whose Twitter feed included a steady stream of retweets critical of Trump’s action.
“The Executive Order’s humanitarian and economic impact is real and upsetting. We benefit from what refugees and immigrants bring to the U. S.,” wrote Dorsey, and “This EO goes against our principles. ”
The tech leaders looked beyond the seven-country ban to make a broad push for immigration reform. Facebook CEO Mark Zuckerberg urged Trump to help the “750,000 Dreamers benefit from the Deferred Action for Childhood Arrivals (DACA) program that allows them to live and work legally in the US. I hope the President and his team keep these protections in place. ”
A federal court ruled late Saturday that the U. S. could not deport citizens of the banned countries who had already arrived in the U. S. It was prompted by a lawsuit filed by the American Civil Liberties Union.
Trump’s move was put into place so fast it literally affected people in transit.
“This was done with almost no notice,” said Carl Shusterman, a Los Angeles-based immigration attorney. He said his office received a leaked draft of the executive order last Tuesday and began advising people about what was in the pipeline.
“I think this is causing a lot of chaos for really no reason at all,” said Shusterman.
Trump’s order prompted tech firms to scramble to locate and notify affected employees, and to issue statements over the weekend.
“As an immigrant and as a CEO, I’ve both experienced and seen the positive impact that immigration has on our company, for the country, and for the world,” wrote Microsoft CEO Satya Nadella in a posting on LinkedIn on Saturday. “We will continue to advocate on this important topic. ”
Microsoft said it has identified 76 employees who are citizens of the seven countries who have a U. S. visa and are affected. But it also said there may be other affected employees who have green cards.
The seven countries cited by the Trump administration have had no role in the ongoing H-1B visa debate. In 2014, nearly 70% of all H-1B visas were issued to people born in India, according to U. S. data.
Ron Hira, associate professor of public policy at Howard University, ran an analysis of the visas issued in the 2013 fiscal year alone and found a total of 1,220 H-1B visas, new visas or renewals, from workers in all seven countries.
In that year, Iran had the largest number of visa holders, with 810. It was followed by Syria, with 280; Libya, with 53; and Iraq, at 46. The Sudan accounted for 18 visas; Yemen, 11; and Somalia, 2.
In 2013, Microsoft was the top employer of H-1B-visa workers from the seven countries, with 31. It was followed by Qualcomm at 21, and Google at 15, according to Hira.
“The Iran numbers suggest to me that it is foreign students who graduated from U. S. universities” as well as having family ties in the U. S., he said.
Iran’s Foreign Ministry, in a statement carried by Iranian media, called the U. S. move “insulting” and an “open affront” and said it is considering a reciprocal response.
The Trump order also has broad impacts.
“If a company wants to hire a worker from one of those countries, they won’t be able to get a visa for at least 90 days,” said Stephen Yale-Loehr, a professor of immigration law practice at Cornell University. “Foreign national employees on work visas who are temporarily overseas may not be able to return. ”
The Computing Research Association, in a statement, warned that the Trump order “may also discourage foreign-born researchers from bringing their talents to the U. S. in the future, which would have significantly detrimental impacts on our national competitiveness. “

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