Microsoft’s Teams Unbundling: What’s the Impact on Your Organization?

Casey Lindsay

It’s that time of the year again…spring has sprung, the flowers are in full bloom, the grass is growing fast, it’s such a rebirth of life—and with that comes another unprecedented Microsoft announcement: the “unbundling” of Teams from Office and Microsoft 365 suites. Change is constant in the Microsoft world, but this change is profound. Let’s dig in and start with the why.

There are three main reasons Microsoft has made this change:

  1. Antitrust Investigation: Microsoft is making these unbundling moves with an aim to head off European antitrust regulators that are in the process of investigating the impact of bundling Microsoft Teams with other Microsoft products. Microsoft unbundled Teams from Office 365 across Europe and Switzerland in 2023, and this move expands this unbundling globally.
  2. Anticompetitive Landscape: Competitors like Salesforce’s Slack have argued that Microsoft’s practices were a form of monopolistic self-dealing, i.e. customers were left with no choice but to go “all in” on the Microsoft stack, which included the obvious Teams deployment for unified communications (UC).
  3. Overarching “Pricing Change”: Using Connection’s CSP pricing that is published on our website, historically, Microsoft 365 E3 with Teams bundled came at a price point of $32.84 per user per month. Today, Microsoft 365 E3 (without Teams) is $30.84, and Microsoft Teams Enterprise is $4.84 for a grand total of $35.68 per user per month. That’s an 8% increase to end up with the same product mix as before!

Now let’s pivot from the “why” and help to distill these changes down to how they will affect you, the Microsoft customer. As with any Microsoft rules, there are always nuances, and I will keep my commentary high-level for ease of interpretation and to help reduce heartburn.

First and most important, if you are an existing subscriber of Microsoft 365 E3/E5 or Office 365 E1/E3/E5 with Teams included, rest assured; you can continue to purchase your existing suites that include Teams. You will be able to upgrade these existing subscriptions to a higher version with Teams. You will even be able to renew these suites with Teams into a new agreement with one caveat: you cannot renew from EA to CSP, as Microsoft considers this a “new” subscription. But you can do to the opposite and renew these suites with Teams from a CSP to an EA. There is one last unique customer circumstance to mention: for customers in the middle of a CSP partner change, Microsoft has offered a grace period until June 30, 2024, to get any new subscriptions for Office 365 and Microsoft 365 procured with Teams included.  

The bottom line is any “net new” Office 365 or Microsoft 365 purchase (meaning you don’t currently own an active subscription of the suite) on an EA or CSP must be purchased as two separate SKUs: Office 365/Microsoft 365 without Teams + the Teams Enterprise SKU if you desire to use Teams.

For those customers using another solution for UC like Webex, Zoom, or Slack, this does bring some sunshine in the way of savings. You’ll end up saving between $1.75–$2.25 per user, per month without Teams. But I would also argue a point where that savings could bring diminishing returns. For instance, let’s say a company is using a competitor to Teams but has Teams deployment on their roadmap, even if it’s remote. It would be vital to dig in and compare the financials to unbundle now and forecast long-term costs to stack the two SKUs down the road. Projecting that breakeven point is necessary to determine if your long-term costs could outweigh your immediate savings. This is probably a good time to let you know that this kind of forecasting fits squarely into my team’s wheelhouse: Connection’s Microsoft Landscape Optimization (MLO) service!

There are a few Microsoft suites that will remain unchanged, meaning Teams will remain available to be bundled (but will also include an option to unbundle). This includes all Frontline SKUs: Microsoft 365 F1 and F3 plus Office 365 F3 (existing customers only). Additionally, Microsoft 365 Business Suites will also remain with an option to include Teams bundled.

There are certainly a lot of rabbit holes you can venture down under each customer’s circumstance when researching your best option. I would lean on Connection to be your guide through this big announcement. I do believe that Microsoft is making this move to provide customers with more flexible options for collaboration. I also think this is part of an overall strategy to position Teams as a standalone product to compete more effectively with other tools in this space. However, I’ll leave you with a final thought on this topic—and this is just my own opinion—I think this move is more about Microsoft staying ahead of (the potential for) legal scrutiny than it is about offering their customers an option to save money or more flexibility in choosing a collaboration tool.

Ready to figure out your next steps for your Microsoft licensing situation? Contact us today.

Casey Lindsay is a Strategic Software Consultant with Connection’s XLO Practice. Casey brings over 15 years of vast Microsoft experience helping Connections’ clients navigate all the complex decisions surrounding their Microsoft technology and investment strategies. When not tackling Microsoft decisions, Casey can be found outside spending time with his family traveling with their RV to create lasting memories doing things like hiking, kayaking, and paddleboarding.