Microsoft Corporation (MSFT) has released pricing for its Windows 365 operating system. The virtual operating system, which Microsoft claims is part of a new category of computing called cloud PC, is currently available to businesses with up to 300 employees. The company plans to release another edition aimed at enterprises.

Key Takeaways

  • Microsoft has released pricing for Windows 365, its cloud PC.
  • Observers say that the pricing is best suited for small businesses with fewer than 10 employees.
  • Microsoft has benefitted from the move toward cloud-based services. Whether Windows 365 becomes a success story in this trend is still to be determined.

Prices are charged based on the number of users and depend on the hardware configuration chosen for the virtual machine. For example, at the lower end, $20 per month gets a user 2GB RAM, a single virtual core, and 64 GB storage. At the top end, the company charges $162 for eight virtual cores, 32 GB RAM, and 512 GB storage. Besides including apps from the company's popular Windows 10 or 11 operating systems, Microsoft has said that the Cloud PC will also support seamless access to apps from other operating systems.

An Unenthusiastic Reaction

Initial reaction to the pricing not been enthusiastic. Some have criticized Microsoft's prices, especially the top-end figure, because it works out to being more expensive than the standard cost of a PC. They argue that it is cheaper for businesses to purchase a personal computer for employees than invest in a cloud solution.

Others have pointed to the similarities between Windows 365 and the Azure Virtual Desktop (AVD), a similar virtual desktop option available on Microsoft's cloud services. Given the pricing tiers, they say that Windows 365 is best suited for small businesses with fewer than 10 employees or for businesses that do not have much experience with remote desktop virtualization and would like an easy solution.

The tepid reaction to Microsoft's latest product mirrors the debate around the company's Office 365 launch a decade ago. Back then, observers said that there was considerable time and effort involved in migrating to the new cloud-based application for small businesses. After a slow launch in 2011, Office 365 has become one of the top earners for Microsoft in its Productivity and Business Processes segment. Revenues for that segment increased $1.8 billion or 15% from the previous year's figures during the company's latest quarterly earnings.

It is difficult to say with certainty whether Windows 365 will have a similar trajectory. But it taps into prevailing workplace trends. The pandemic shutdown accelerated the shift toward remote working, and Microsoft's products have benefitted from the move. A slew of cloud-based products, such as Google Docs and Sheets, from tech behemoths like Alphabet Inc. (GOOG) and Apple Inc. (AAPL) have helped cloud services displace on-premise software as productivity tools of choice. In fact, the most popular operating system in the world today is Android, a mobile operating system. Microsoft's Windows ranks second.