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This article is part of our Conference Coverage: Microsoft Ignite 2018 conference coverage

Microsoft doubles down on Office 365 AI capabilities

Microsoft confirmed its strategic commitment to Office 365, delivering an improved version that includes new AI and machine learning features.

Microsoft's Azure cloud platform was the primary focus at the company's Ignite conference this week, but a number of Office 365 AI and machine learning additions underscored the productivity suite's strategic role in Microsoft's overall cloud strategy.

Online subscriptions for Office 365 have risen rapidly over the past couple of years -- to 31.4 million as of July 2018, according to Microsoft -- as more users grow comfortable to entrust data in their productivity software in the cloud.

"[Office 365] is one of the first application areas where users are willing to put things in the public cloud," said Meaghan McGrath, a senior analyst at Technology Business Research Inc. (TBR), in Hampton, N.H. "Customers are less willing to put things like ERP systems in the cloud, but most people feel comfortable putting productivity workloads in the cloud."

Analysts agreed that Office 365 represents an important advantage for Microsoft in its competition with AWS. Amazon's online productivity software has far fewer users than Microsoft's applications suite.

"Office 365 has been the [cloud] leader for Microsoft getting into the larger accounts ... and helping cement its subscription model," said Josh Trupin, an analyst with Directions on Microsoft in Kirkland, Wash.

Few TBR customers who evaluated AWS' application suite chose it over Office 365, McGrath said. The looming market presence of Microsoft's suite was too great.

"They would have chosen AWS if it wasn't for their parent company's widespread deployment of Office," she said. "'[AWS doesn't] have the legacy inroads of Office, and there is this draw to being a Microsoft shop. Even with a product, AWS will not compete there."

Office 365 AI additions

One of the AI-based capabilities Microsoft showed off, called Ideas, will incorporate a number of AI features to simplify a user's experience across the breadth of all Office applications. For example, as users create documents in PowerPoint, Ideas can suggest different layouts and images. In Excel, Ideas can identify statistical trends and suggest charts to make the information more understandable.

[AWS doesn't] have the legacy inroads of Office. ... Even with a product [in that space], AWS will not compete there.
Meaghan McGrathanalyst, Technology Business Research

Ideas is available in Excel this week. Microsoft will also roll out a preview version to other Microsoft applications, beginning with PowerPoint Online this week.

Another enhancement is a unified labeling capability to configure data-sensitivity labels simultaneously for Office 365 and Azure Information Protection. This offers users a more integrated approach to configure and apply protection, as well as retention labels and policies.

Microsoft also showed off additional features for Microsoft 365, which combines Office 365, Windows 10 and Enterprise Mobility and Security products. The improved version includes several management and administration capabilities that customers can now manage under a single pane of glass, instead of multiple management locations across the web.

Another Microsoft 365 addition is Admin Center, which also works with Office 365. This offering streamlines system administrators' job to monitor and manage applications and services across both Microsoft and Office 365 subscriptions.

More Office options risk user confusion

A third version of Office, Office 2019 for both Windows and Mac, is now available for businesses and will be available to individuals over the "next few weeks," Microsoft said.

With three versions of Office now available, some analysts are concerned that Microsoft risks confusing users as to which version offers the most appropriate set of capabilities for their individual needs. AWS ran into a similar problem with the variety of its platform and infrastructure offerings, TBR's McGrath said.

"Customers appreciate the many services AWS has, but there is a point where it becomes too much to consume, and they become unsure which product to use for certain uses cases," McGrath said. "The AWS situation is different than what Microsoft faces on the applications side, but they need to keep an eye on how many SKUs they put out there."

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