Microsoft Squeezed by Growing Resistance to Software Bundles

It’s been a popular sales tactic at Microsoft for several years now: Approach a corporate customer paying for Microsoft’s popular 365 workplace apps and suggest they sign up for an all-in-one software bundle that also includes cybersecurity and compliance tools, along with a suite of other business apps. It costs 58% more per user a month. The sales tactic has been a hit, turning the bundle into one of Microsoft’s popular products—until now.

However, as companies scrutinize their software spending amid the slowing economy, they’re pushing back on software bundles, looking to pay only for what they use. Microsoft customers, for example, are increasingly telling the tech giant they only want certain security and compliance parts of the all-in-one bundle, known as E5, without other business apps. As a result, customers are often striking narrower deals that typically cost about 5% less, say two Microsoft salespeople, who described increasing difficulty hitting internal sales quotas on E5 in recent quarters.