Microsoft 365 licensing has always been complex. It just got more complicated.
On April 1, 2024, Microsoft unbundled Teams from its M365 and Office 365 licenses worldwide. The company had already removed Teams from its subscriptions sold in the European Economic Area (EEA) and Switzerland in response to a European Commission investigation into anticompetitive practices. Unbundling Teams from all licenses creates greater consistency worldwide.
It also adds to the confusion surrounding M365 licensing. As we noted in a previous post, organizations already face a dizzying array of M365 subscription options. There are different plans for small businesses, enterprises, schools and governments. Within those plans are different levels to choose from. There are also volume licensing options and subtle variations based on geographic regions, platforms and devices.
Despite the licensing complexity, organizations find M365 valuable. According to Bitglass research, 81 percent of organizations use cloud-based productivity and collaboration tools, and more than half of those use M365. Gartner estimates that 20 percent of corporate employees use M365.
The Growing Popularity of Teams
In addition to familiar productivity tools such as Word, Excel and PowerPoint, an M365 subscription gives users access to OneDrive for Business for file syncing and sharing. SharePoint Online is also included in the M365 suite, providing more advanced file management and collaboration.
Microsoft introduced Teams in November 2016 and rolled it out to Office 365 users in March 2017. According to data from Statista, the number of daily active Microsoft Teams users worldwide has risen from 2 million in 2017 to 300 million in 2023. Teams grew faster than Zoom during the pandemic and is arguably the world’s most popular collaboration tool.
When Teams entered the market, Slack ruled the roost. Slack popularized the concept of using chat as an alternative to email. Like Slack, Teams allows users to chat, share files and schedule meetings and video calls. However, Teams has one key advantage — deep integration with M365 and the Office productivity tools.
Pleasing Regulators, Not Customers
According to Slack, that advantage is unfair. The company filed an antitrust complaint with the EU, arguing that Microsoft was misusing its platform power. As a result, Teams is no longer bundled with an M365 subscription. The question is: How should organizations respond to this change?
It might be tempting to choose an M365 license without Teams for those users who don’t necessarily need the collaboration tool. It’s important to recognize, however, that Microsoft unbundled Teams due to regulatory pressures, not to give customers a more cost-effective option. In the U.S., an M365 subscription without Teams is $2 per user cheaper than before the change. However, adding Teams to a subscription that doesn’t include it will cost $5.25 per user per month.
Choosing the Right Option
It is still possible to purchase M365 subscriptions with a Teams license included. For example, an M365 F3 enterprise plan with Teams is $8 per user per month. That’s significantly less than adding standalone Teams later. For users who need Teams but not M365, a standalone Teams license is a nice alternative.
Existing customers can continue to use, renew and upgrade their M365 licenses with Teams included. However, it’s unclear how long Microsoft will maintain this policy.
M365 licensing is more confusing than ever, but Verteks is here to help. As a Microsoft partner, we understand all the subscription options, including those for education and government organizations. We will work with you to determine which licenses are best for your organization and whether Teams would be valuable to your users. We can then help you get the best possible deal. Give us a call to schedule a no-obligation consultation.
