Deltec Think About This - Killing Me Microsoftly September 16, 2020 | Page 3

Think About This
INVESTMENT RESEARCH
MICROSOFT OFFICE 365 MONTHLY ACTIVE USERS
300
250
200
Teams 5% O365
Penetration
Teams 25% O365
Penetration
Millions
150
100
50
0
Nov-15 May-16 Nov-16 May-17 Nov-17 May-18 Nov-18 May-19 Nov-19 May-20
Source: Company Filings, Deutsche Bank Research, Deltec
Microsoft’s offer cannot be jettisoned. The Office 365 package has essential applications and ubiquitous file
formats. And for business and household customers, Microsoft is a one stop shop covering word
processing, e-mail, presentations, and spreadsheets.
When users require more functionality and smaller companies innovate to offer it, that stirs the wolf. With
the sudden change in the workplace this year, someone is in his territory. He is wide awake now. The Office
365 package has 258 million monthly active users (as of May 2020). Adoption and user growth are
accelerating.
We want to highlight Dropbox and Slack, two companies that we think are struggling. Both companies
enjoyed explosive growth from early adopters of their free plans and wooed investors with the lure of their
large user base.
Work from home mandates due to the coronavirus lifted the awareness of these companies, but paid user
growth has disappointed and the profitability of their business models has come into question. As the
competition, not least Microsoft, reacts to customer demand, their myopic focus and lack of differentiation
could spell doom.
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Deltec Bank & Trust Limited