The News: Two sources with direct knowledge of the decision have reported that Microsoft intends to allow the purchase of Office without purchasing the leading UCaaS product, Microsoft Teams. The move is being discussed as a way to avoid a formal anti-trust investigation by EU regulators related to a complaint levied by Slack in 2020. The initial report of this development in the Financial Times can be found here.
Microsoft Reportedly has Plans to Unbundle Teams and Office
Analyst Take: In their Q3 FY23 earnings call, Microsoft announced that they had surpassed 300 million monthly active users of Teams, a number that has grown at 12-15% with the steadiness of a metronome. Many of those users are messaging only, but an increasing cadre of that group also use meetings and, in turn, voice calling.
Microsoft is doing an incredible job activating its billions of Office users into Teams. Some of that activation is achieved through the substantial product improvements that have taken place in the last few years, and some of it has been based purely on convenience.
The COVID pandemic was pivotal in the growth of Teams as IT teams globally were scrambling for a video meeting solution and found that they were already provisioned for Teams as part of their Microsoft Office license. This bundling of Productivity and Communications is at the core of Teams’ success and central to the movement of the entire market from standalone meeting licenses to the bundled approach.
In Q2 of 2020, we estimated that there were 50.8 million users with standalone meeting licenses and 40.9 million that had purchased meeting services in a bundle of some kind (counted as Monthly Active Users or MAUs). In Q4 of 2022, we estimate those numbers to be 160.3 bundle purchasers and 55.9 standalone meeting license buyers.
More interestingly, the recent gain in MAUs are far outstripping the decline in standalone licenses indicating that the market is still minting new users of video meetings, and the primary driver of that growth are new users of Teams Meetings.
It is difficult to estimate what portion of the Teams growth is related exclusively to the convenience factor and what portion is related to the competitive strength of the Teams meeting experience. Additionally,  the initial report of this plan comes from two un-named sources and lacks crucial details on whether this is a separation of the installation experience or a true unbundling of licenses, and that will be a meaningful difference in how this all plays out.
Still, it’s safe to say that the unbundling (in whatever form) puts one of the major competitive advantages of Teams in play, and the risk that creates is shared by the market at large because one of the major vectors for users to enter this market is the M365 bundle.
Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
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Author Information
Sean is a trusted advisor to and assists industry vendors and enterprises with workplace communications and collaboration strategies, market entry and product assessment, product portfolio analysis, and sales enablement services.
Sean holds a Bachelor of Science in International Business from University of Colorado, Boulder.
