Microsoft announced on January 27th that it is planning to make its self-service BI solution, Microsoft Power BI, available for a free preview to any United States-based user with a business email account. Microsoft also provided a preview of Power BI for iPad and is planning to create iPhone, Android, and Windows apps for further mobile BI support.
In addition, Microsoft plans to make the newest version of Power BI available as a free service when the general availability launch occurs. There will also be a Power BI Pro offering available, so that Power BI will, in effect, become a freemium service similar to existing Microsoft Skype and Yammer services. The Power BI Pro offering will increase data from 1 GB to 10 GB per user, accelerate streaming data from 10 thousand rows per hour, to 1 million rows per hour, refresh data on an hourly basis, and provide embedded data management and collaboration capabilities
To prepare for this pricing change, Microsoft also plans to change the current price point for Power BI to $9.99 per month, which represents a significant reduction from the current price points for cloud BI.
There are several key ramifications for enterprise BI that Blue Hill’s community must understand immediately:
1) Microsoft is taking a freemium approach to BI with the goal of owning the end user market. This is a strategic approach based on Microsoft’s view of the new, end-user and consumerized view of software purchase and acquisition and demonstrates Microsoft’s willingness to commoditize its own price points and products for the long-term battle of winning cloud and end-user mindshare. Microsoft has learned to execute on this freemium model from several key consumer and freemium investments over the past decade: XBox, Skype, and Yammer.
In pursuing XBox revenue, Microsoft has had to learn the consumer gaming and media market and has gained a deep understanding of demos and consumer advertising that it previously lacked. In addition, Microsoft’s acquisition of Skype has led to Microsoft’s management of a free service that has fundamentally transformed communications and actually led Microsoft to even change its enterprise communications service from “Lync” to “Skype for Business.” And, finally, Microsoft’s acquisition of Yammer was initially seen as confusing, given how Yammer directly competed against collaboration stalwart SharePoint. However, as Microsoft has continued to execute on the development of Skype and Yammer and started integration between those services and Microsoft’s traditional Lync and SharePoint services, it has become obvious that Microsoft is willing to compete against itself and to take on the challenging transformational tasks needed to compete in a cloud and mobile world.
In this regard, Microsoft is actually in a less challenging situation with Power BI in that Microsoft never fully invested in creating or buying a Business Objects, Cognos, or Hyperion BI application suite. This means that Microsoft is able to position itself for a cloud BI world without having to directly compete against its own products. At the same time, expect Microsoft to bring all of its best practices from XBox, Skype, and Yammer to support a freemium model and agile development that have led to the success of these other more consumerized products.
2) Microsoft is also planning to commoditize the mobile BI market. With the impending launches of Power BI for iPhone, Android, and Windows, it is difficult to imagine mobile BI as a premium product going forward, at least in terms of pricing. Mobile BI is already basically table stakes from an RfP perspective, but high-quality mobile BI will now be necessary even for free and freemium BI offerings. In 2010, mobile BI and high quality visualizations were key differentiators. In 2015, these are just basic BI capabilities. Companies seeking differentiation in BI will increasingly look at professional services, vertical expertise, and the ability to eliminate both implementation time and IT support to reduce the basic total cost of ownership for BI.
3) Cloud BI pricing to compare apples to apples is becoming more difficult. Although Power BI’s current and intended pricing models are fairly straightforward, one of the challenges in cloud BI is that every vendor provides a different set of resources and capabilities to support its on-demand and subscription services. As a quick example, consider how Power BI will compare against Jaspersoft, which provides BI services on an hourly basis on Amazon Web Services.
Power BI will provide its Pro service at $9.99 per month, or basically $120 per year. A variety of cloud BI services such as Birst, GoodData and InsightSquared could come in at about $1,000 per year per user for a standard out-of-the-box implementation. In contrast, Jaspersoft supports an annual instance on AWS at 55 cents per hour on an m3.medium EC2 instance, which equates to about 4 GB. This adds up to about $3,750 per year. So, is this a simple comparison?
Consider that Power BI provides a standard BI environment, but will not be customized out-of-the-box to immediately support standard data sources such as Salesforce.com. Birst and GoodData will provide various levels of integration, data structures, and vertical expertise to their implementations while a sales analytics specialist such as InsightSquared could potentially implement a new solution with Salesforce data in a matter of minutes. And Jaspersoft’s offering will be better suited for an embedded BI solution because it provides no user limits. So, even with this impending price war that Microsoft will drive, companies will still have to carefully define their BI use cases and select potential solutions carefully. However, Blue Hill expects that standard BI capabilities on a user-specific basis will become as easy to access as Skype, Yammer, an XBox game, or Facebook (another Microsoft investment).
In 2015, Microsoft will shift the fundamental BI purchase decision from “How much does it cost to get BI?” to “How much will it cost to get BI expertise that is aligned to our organization?” The answer to the former question could well become “Microsoft.” The answer to the latter question is where other vendors will need to compete.