Image source: Microsoft.

In recent years, Microsoft (NASDAQ:MSFT) has worked very hard transitioning its flagship Office productivity suite to a subscription model, where consumers pay a regular monthly fee and receive consistent and iterative software updates instead of paying up for a perpetual one-time license every couple of years (Microsoft still offers perpetual one-time licenses as a purchase option). Anytime you completely change the revenue model for a core product, there's bound to be considerable risk in the transition.

But the good news for Microsoft and its investors is that it is executing this plan incredibly well. The shift is important because rivals were starting to apply competitive pricing pressure, with some rival offerings even being free, and moving to a subscription model is a defensive action that also increases revenue visibility looking forward. In no uncertain terms, Office 365 consumer subscriptions have soared.

As of the most recent quarter (ending Sept. 30, 2015), Microsoft had 18.2 million Office 365 consumer subscriptions.

Source: SEC filings. Calendar quarters shown.

Here's a running total of Microsoft's Office 365 customer base since 2014.


Office 365 Consumer Subscriptions















Source SEC filings. Calendar quarters shown. Subscription figures in millions.

It's also worth pointing out that this growth is purely on the consumer side of the business. Microsoft's enterprise business is far more important, and while the software giant doesn't disclose the specific number of seats, it is enjoying strong Office 365 commercial seat growth as well.

Evan Niu, CFA has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.