Although the race for domination in the collaboration space may well have been won by Microsoft Teams, the next challenge for businesses is making the most of the platform. 

The answer to that challenge often comes in the form of integrations into Teams, giving employees apps within the collaboration platform to use instead of logging into multiple portals at the start of each day.  

Calling and other forms of communication have become really important in hybrid work environments.  Employees want these tools at their fingertips which usually means in Microsoft Teams. Therefore interest in Teams calling has grown, with Microsoft CEO Satya Nadella revealing late last month that calls originating from Teams had grown 50% during its Q1 reporting. Such growth is reason to believe that the number of Teams Phone monthly active users has also kicked on past the 80 million mark announced in summer. 

Critical Variable

Those statistics would indicate that there is already a healthy appetite to route calling through the collaboration platform.  

However, according to Micah Singer, Managing Director at TeamMate Technology, the appetite might be considerably larger. “The single most important variable to determine who will buy an integration to Teams is the cost of the license. Lower license cost will motivate large enterprises to give it a shot.” 

There are workarounds and cross-launches that can be compelling and less expensive, but the Microsoft licensing lists at US$8 per user each month or equivalent in markets around the world. Singer believes that if Microsoft lowers this amount they will see a flood of new Direct Routing and Phone System users immediately, and it will start to build momentum for Azure Communication Services and interest in Operator Connect.  

From one perspective, Microsoft already knows this because they have a market that is quite large and already buys reduced rate licenses. These are non-profit entities, governments and educational institutions. These are often organisations that have cash constraints as they are not in ‘for-profit’ sectors so licenses are considerably less expensive as they have less operating budget to buy them. 

“In the US market we see consumption of the Microsoft Direct Routing and Phone System at a much higher rate among these not for profit organisations, schools and state governments,” said Singer. “This seems to make a compelling argument that there will be high elasticity of demand based on lower pricing for Microsoft Teams softphone.” 

Reducing Cost. Increasing Appeal

At the start of the year, Ribbon Communications produced some interesting research from November 2020 that compared business’ plans regarding Microsoft Teams. According to this research, between 2019 and 2020, there was a 103% increase in SMEs either planning, deploying or completing their migration to Teams.  

The research found that 54 percent of businesses with between 1 and 100 employees were planning or deploying Microsoft Teams to their workforce. This broad-based and extremely high level of interest in lower-cost markets only further demonstrates that there is serious demand for Microsoft’s collaboration solution.  

While many companies do pay a premium to use Microsoft Office products the Phone System license has been particularly confusing.  The cost is a low priced option for a PBX but a very high priced option for a softphone. Most service providers prefer to offer a fully integrated softphone that works equally well in all form factors and Microsoft can take advantage of amazing positioning in the softphone market. 

“If Microsoft releases an Office 365 $3 Direct Routing license that can be added on to any business or enterprise user, Teams as a softphone will take off like a rocket.” said Singer.  “If you are using Teams as a softphone with your external providers it’s a win for Microsoft and for the external providers.  

“It will be interesting to see if Microsoft makes strategic pricing decisions that embrace its role as a collaborator with carriers and operators, or if there is a continued push to offer contact centre and other telephony services natively. Regardless of the next decision Microsoft makes, the key to adoption will come down to cost.” 

 

  



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