Still no signs of a Microsoft 365 E7 bundle, but the subscription landscape is shifting

Mary Jo Foley is the Editor in Chief at Directions on Microsoft. Before joining Directions, Mary Jo has worked as... more

One of the most common customer questions we get at Directions on Microsoft is when we expect Microsoft to introduce a new high-end tier of Microsoft 365 enterprise suites (likely an “E7”). As was true last year, there’s still no tangible evidence Microsoft is ready to introduce such a suite any time soon. Microsoft officials continue to emphasize that Microsoft 365 E5 adoption is key to Office’s continued enterprise growth and leave it at that.

There is, however, a noteworthy change in how Microsoft is rolling out key new services to its enterprise subscription customers. In the not-so-distant past, Microsoft would have been expected to deliver these new services as additions to existing Microsoft E3 and/or E5 plans for no additional cost. But instead, Microsoft increasingly is introducing these kinds of services in the form of pricey add-ons, and sometimes add-ons in the form of their own “mini suite” bundles.

The Entra Suite, the Intune Suite, Defender Vulnerability Management tier of service, and Teams Premium are all examples of add-ons which previously would have been likely to be folded into E3 and/or E5.

“These add-ons each share three characteristics. They each require a service included in one of the Microsoft 365 enterprise suites (E3 or E5); each has reasonably broad appeal to knowledge workers; and each would likely have been added for no additional cost to existing Microsoft enterprise suites, based on past trends,” said Directions on Microsoft analyst Wes Miller.

The recently added Entra Suite, for example, includes (with each piece also available separately) Entra ID Governance, Entra Internet Access, Entra Private Access, as well as premium face check capabilities, on top of the otherwise free Entra Verified ID service. Entra ID Governance is US$4 per user when added to Entra ID Plan 2, US$7 per user when added to Entra ID Plan 1. The Entra Suite is US$9 per user when added to Entra ID P2, US$12 per user when added to Entra ID P1.

A new top shelf?

The release of so many new core services as add-ons could be interpreted as a sign that Microsoft is gearing up to release an E7 subscription. Such a move wouldn’t be too surprising, as Microsoft execs have said that the best way for the company to grow Office average revenue per user (ARPU) is to migrate customers to more expensive Microsoft 365 suites.

“Microsoft is always ready to displace the current top-shelf tequila with a new top-shelf,” said Directions’ Miller. Bundling together some of the more compelling new services into a comprehensive E7, priced somewhere under $100 per user per month, would give Microsoft a new, very premium subscription offering.

But there’s an alternative possibility. Perhaps Microsoft has done the math and calculated that add-ons will generate more money than suites. Although Microsoft didn’t provide any dollar figures for Microsoft 365 Copilot sales during its Q4 FY’24 earnings call on July 30, officials did say the number of customers for this $30 per user per month add-on grew 60% from FY’24 Q3 to Q4.

Two years ago, Microsoft disclosed that only 12 percent of its Office 365/Microsoft 365 installed base were E5 subscribers. (As of Microsoft’s Q2 FY2024, there were more than 400 million paid Office 365/Microsoft 365 subscribers, according to Microsoft.) The company has not provided an updated figure since then, but officials have said that the E5 base is growing at a good clip — which isn’t too surprising, given various incentives Microsoft has provided to help move more customers to E5, such as holding its price constant at $57 per user per month while increasing the prices of Microsoft 365 E3 and all other Office 365 suites.

Microsoft 365 E7: What might be inside

If Microsoft ever does decide to create an E7, what’s likely to be included that’s not in E5?

Any or all of the four previously mentioned mini-suite add-ons would be good candidates, meaning Entra Suite/Entra ID Governance; Intune Suite and/or Intune Plan 2; Microsoft Defender Vulnerability Management, and Teams Premium.

Other strong possibilities include:

Copilot for Microsoft 365
Viva Suite
Other goodies: If orgs meet some E7 purchase coverage threshold, Microsoft might throw in extra capacities, not having to augment shared mailboxes with security / compliance SKUs, etc.

Regardless of which path Microsoft takes, customers should be prepared to negotiate at their next Enterprise Agreement (EA) renewal to consider the price increases they’ll incur and to avoid overspending on immature and still evolving features.