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Microsoft's new Office 365 Enterprise E5 heats up SMB market

Microsoft's new Office 365 Enterprise E5 is expected to heat up the competition with Cisco and other telephony vendors in the SMB market.

Microsoft has introduced a premium Office 365 version that includes the company's first cloud-based PBX, a component that could prove disruptive to the small and medium-sized business (SMB) market.

The addition of an online PBX to Office 365 means Microsoft can provide IP telephony, along with Web and audio conferencing, voicemail, webcasting and the full suite of Office productivity tools. The bundle, launched this week, will cost $35 per user, per month, plus a $12 calling plan that is only available in the U.S. Microsoft plans to sell the service in more countries in the future.

Experts believe SMBs will find the package, called Office 365 Enterprise E5, attractive, while large companies are likely to wait until the PBX service demonstrates reliability across large numbers of users. Nevertheless, the service is expected to intensify competition with traditional voice vendors, including Cisco, ShoreTel and Avaya Inc.

"They [Microsoft] are a huge threat," said Irwin Lazar, an analyst at Nemertes Research, based in Mokena, Ill. "Those [businesses] who are already adopting Office 365 now have a much easier path to integrated telephony."

Since the release of Lync 2013, now called Skype for Business, Microsoft has been bolstering voice communications in its unified communications (UC) products, which are a part of Office 365. Before the latest announcement, companies had to hire a third-party vendor to connect Skype for Business to an on-premises or cloud-based PBX.

Despite the additional work, a 2014 Nemertes survey of 200 small, medium and large companies found that 13% were using Lync as a phone replacement. The majority of those companies already had licenses for lots of other Microsoft software.

Microsoft's introduction of a cloud-based PBX is a natural extension of the shift from the traditional public telephone network, or PSTN, to IP telephony, a more flexible system that makes it possible to add UC applications. Cloud-based exchanges cut communication costs by eliminating on-premises hardware that requires maintenance and upgrades.

More Office 365 Enterprise E5 benefits

The launch of Microsoft's Office 365 Enterprise E5 also brought a new Web conferencing component, called Skype Meeting Broadcast. The webcasting application can distribute sound or video broadcasts to as many as 10,000 people.  

Microsoft has also added a feature called Delve Analytics, which provides intelligence on user activity. Other additions include technology that lets people dial into an online conference through the public telephone network. That feature fills a gap in Skype for Business, said Rob Arnold, an analyst at consulting firm Frost & Sullivan Inc., in Mountain View, Calif.

"The company now has a highly scalable meeting product akin to webinar and webcast applications to offer its customers and partners," Arnold said.

Next Steps

Cisco buys Acano for video conferencing technology

Microsoft updates Lync with Skype for Business user interface

New Microsoft Office 2016 touts collaboration

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What benefit does your company get from using a cloud-based PBX?
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Office 365 E5 is a competitive hosted IP telephony service that will generate added interest through out the global cloud services market. We team up with Telephony providers across Europe and connect them with our BizSkype setup to provide a competitive Skype for Business klient to any Microsoft Office environment including Office 365.
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