Microsoft’s announcement that it will sell its chat and video app Teams separately from its Office product globally is likely to cause considerable headaches for IT departments and managed service providers.
Why Unbundle?
Teams is to be unbundled and sold separately globally (it’s been unbundled in the EU since last October) in response to an antitrust lawsuit and to avert the possible associated fine.
An antitrust lawsuit against Microsoft over its bundling of Teams with its Office suite in the EU was initiated based on a complaint from competitor Slack Technologies in 2020. Teams was originally bundled with Office 365 as a replacement for Skype back in 2017 and became popular during the pandemic.
However, rival Slack (now owned by Salesforce) alleged that Microsoft was illegally tying its Teams application to its dominant Office productivity suites, thereby leveraging its market dominance to stifle competition unfairly.
The European Commission said at the time: “Microsoft may grant Teams a distribution advantage by not giving customers the choice on whether or not to include access to that product when they subscribe to their productivity suites.”
This led to The European Commission investigating Microsoft over its amalgamation of Office and Teams since 2020 and then to Microsoft separating Teams for Office 365 In October last year in the European Economic Area and Switzerland.
Pressure
Continued pressure from the regulator and the desire to (understandably) avoid a fine that could potentially be up to 10 per cent of its global revenue has now led Microsoft to announce that it will now be unbundling Teams and selling it separately, globally.
How Much?
Starting from April 1, customers can either continue with their current licensing deal, renew, update or switch to the new offers. Unbundled Teams will be available for new customers as a standalone app for $5.25, whereas Office packages without Teams will range between $7.75 and $54.75.
It’s worth noting that these figures may vary by country and currency and Microsoft hasn’t yet disclosed prices for current packaged products.
Trouble For MSPs
Unfortunately, although the move may be good news for Microsoft’s rivals, it’s not a welcome announcement from the perspective of the many managed service providers (MSPs) who are resellers of Microsoft’s packages and products. Indeed, for MSPs it is likely to mean headaches in several key areas, such as:
– Service delivery and integration. Unbundling may disrupt how MSPs bundle services, demanding changes in delivery models due to the deep integration of Teams with Office applications.
– Billing and subscription management Separate billing for Teams and Office could complicate financial operations, requiring more administrative effort to manage distinct subscriptions and compliance.
– Training and support. A standalone Teams setup might increase support queries and necessitate updated training materials, placing additional demands on MSP resources.
– Client satisfaction and retention. Crucially, the change could confuse clients who are accustomed to (and expect) the convenience of integrated packages, potentially affecting their satisfaction and loyalty (during the adjustment phase), lowering the barriers to exit from their supplier.
– Market competition. Facing competitors offering more cohesive solutions, MSPs may need to reevaluate their offerings and pricing to stay competitive.
What Does This Mean For Your Business?
This is not an unexpected development, given Microsoft’s unbundling of Teams in the EU last October, continued regulator and competitor pressure, and the threat of a massive fine. It’s good news for Microsoft’s competitors like Slack, however, for Microsoft, some say that even this concession and change in its product strategy may not be enough to avoid a fine.
The complications and unsettling effects it could have on UK business customers could also cause some considerable problems for the UK’s many MSPs. For example, they may find themselves having to navigate a more complex service landscape, facing challenges in service integration, billing management, and customer support. This could mean that MSPs will have to now monitor the impacts carefully and adjust their strategies to minimise the likely negative effects on their business and client relationships.
This could mean having to adapt current offerings and trying their best to ensure seamless integration and support for both Teams and Office applications independently – an extra challenge in an already difficult market.