Microsoft Makes a Bundle

For Work, Play, Connecting and Communicating

Yesterday Microsoft introduced its competitive Work & Play Bundle, a subscription-based service package that includes productivity and gaming software, music content, storage, communications and Wi-Fi access. For an annual price of $199, Microsoft’s new bundle includes practically everything and takes on practically everyone.

The package allows Office 365 Home to be installed on all registered devices, has an Xbox Live Gold and Xbox Music Pass, Skype Unlimited World, one terabyte of online storage and full Wi-Fi access at more than two million hotspots around the world. Microsoft’s Xbox Music Pass service offers ad-free streaming and downloading of millions of songs, and Xbox Live Gold provides multiplayer access and free games. Skype Unlimited World allows calls to fixed-line and mobile numbers (based on a fair usage policy) as well as Skype calls, and the included Wi-Fi access provides full Internet access at hotspots around the world. All in all, it’s an impressive deal.

The Work & Play Bundle can only be purchased at Microsoft’s retail stores in the US, and is available between 10 November 2014 and 4 January 2015. It’s a strategy to drive foot traffic to its 104 US retail stores for the holidays, but most “limited time offers” tend to be sticky. If Microsoft finds that it has a services hit, the package is likely to continue in some form.

The $199 price offers a significant savings over paying for each service separately. Skype Unlimited World alone, for example, costs about the same as the entire Work & Play Bundle, and a one-year subscription to Office 365 Home costs nearly that at $100. The Wi-Fi access on its own could be worth the cost for frequent travellers.

Microsoft’s deal puts it into competition with services offered from companies in several industries including Amazon, Google, Pandora, Sony, Spotify and Vonage, and may cause some abrasion with network operators. The company’s ambitions to move into a wider array of services could also cause conflicts with developers at a time when the company needs to address its significant applications gap. It’s a fine line to walk.

The company is ultimately unifying Microsoft-based devices with its services, but its hardware is ancillary to the software that runs on top of it — like a set-top box to a satellite broadcaster, the device supports a subscription. Microsoft is becoming a subscription-based company.