Microsoft's bundling of Office with Teams at the start of the pandemic split opinion. It was hailed as an inspired business move or alleged as an uncompetitive assertion of market dominance.
Neither line of argument is mutually exclusive. Last week, the news that Teams had reached a staggering 300 million monthly active users (MAU) broke the day after the Financial Times reported that Microsoft had agreed to decouple Teams from its Office suite to avoid a formal EU Commission antitrust investigation.
The concession means that when prospective customers buy Office in the future, they will have the choice of whether to purchase Teams or not. The news has inevitably caused shockwaves within the UC and collaboration industry. However, with Teams such a behemoth solution, will its decoupling from Office ultimately matter?
"I think it absolutely matters," Sean Spradling, Senior Analyst at Wanehouse, told UC Today. "I think it's really important that we recognise when the pandemic hit that the meteoric rise of Teams was associated and connected with the idea of this bundle. We can't necessarily decipher at this point how much of it was directly oriented around convenience versus the quality of the product that Microsoft has put together over time."
"I think that'll be a real measure of the objective quality of the Teams solution as it steps forward."
Melissa Schwarz, Cloud Phone Expert at Schwarz Consulting, added to UC Today:
Once it's decoupled, assuming that happens, Teams is going to have to stand on its own as a solution. People that would have just said, ‘Well, it's included, so we're just going to go with it,' now have a decision they didn’t necessarily have to make before."
"They may be looking at Teams and evaluating its actual merits as opposed to the fact that it's included in Office," Schwarz continued, "and so went with that because it was already there. I think it'll be interesting to see how that impacts their growth going forward."
Spradling added important caveats around the scale of any potential impact and the uncertainty of an exact outcome to any agreement, especially since this has been an ongoing issue for two-and-a-half years. EU regulators had been in discussions with Microsoft since rivals Slack filed an official complaint in 2020 claiming that Microsoft's bundling of Office and Teams together was uncompetitive. However, this will potentially still signify a major business challenge for Microsoft.
Dan Root, Senior Analyst at Wainhouse, agreed with Schwarz and Spradling that this could be a pivotal moment for Microsoft. "I do think that there is a threat side of this to Teams," he told UC Today, "in the sense of, 'are you really good enough to still stay in all of these accounts that you were bundled once you decouple?'
Root also identifies the challenge around unit economics and whether Teams' pricing will change due to the decoupling. "Once you start putting unit economics behind it that's in line with some of the other players," Root added, "now there's a reason to go through and evaluate 'Is this the best platform for me to align with, or should I be looking at Zoom or WebEx or RingCentral or something else down the line'."
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However, bundled offerings have become the norm since the pandemic. In an industry where innovation is constant, the pairing of Office and Teams has lost some novelty.
"That (Teams) product has come a long way in those in those couple of years," Spradling expanded. "But at this point, everybody in the market has switched to a bundled approach. About 75 percent of the meeting users out there are, at this point, purchasing their meeting capability through some kind of a bundle. The remaining 25 percent is dwindling. It's slowing, it's not going to go to zero, but we know that bundles have taken the day certainly."
