Microsoft is trying to catch up to Zoom with a new version of its Team chat app for consumers, but it may have trouble getting people to pay up for it
- Earlier this week, Microsoft announced a new version of its Teams chat app, aimed at consumers - an app that will go on to compete with Zoom, which has become the video-chat standard for everything from boardroom meetings to yoga classes amid the coronavirus crisis.
- Analysts say that despite the app's success in the workplace, Microsoft will be hard-pressed to get consumers to really embrace Teams, when they're already using everything from Zoom to WhatsApp to chat with friends and family.
- At the same time, one analyst says that consumers might turn to Microsoft 365, the cloud productivity suite that includes Teams, to keep all of their email, calendaring, and chat needs in one place, given that both professional and social lives have moved online amid social distancing mandates.
- Experts also expect that ongoing scrutiny of Zoom's approach to user privacy could also benefit Microsoft, which has a more established and transparent privacy policy.
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With social distancing mandates in place across much of the world, people around the world have turned to video chat apps to both stay productive at work and hang out with friends and family.
The main app they're using: Zoom, which started as a tool for businesses, but is now something of a standard for schools, virtual happy hours, yoga classes and other social engagements. Amid the hype, Zoom's usage and stock price have both soared. And in a blog post published Wednesday, CEO Eric Yuan said usage had increased by 1,900%, with 200 million daily free and paying users in March, up from 10 million at the end of December.
Now, Microsoft is looking to get in on the action. Earlier this week, it announced a consumer version of Teams would be available later this year, as part of a consumer-friendly version of its Microsoft 365 productivity bundle. The announcement comes after job postings over the past few months for the team an executive once explained as a part of Microsoft's vision to "win back" the "magic" it lost with consumers.
It's not the first time that Microsoft has raced to reach parity with Zoom: Earlier this month, Microsoft Teams added new features that its rival already offered, including background noise suppression in video calls and a way to virtually raise your hand when you want to say something in a video call.
The problem, experts say, is that Microsoft may struggle to attract consumers over to Teams, given that there are so many free options out there already in people's hands - the Microsoft 365 consumer bundle will be priced starting at $7/month; Zoom has a free service tier, and apps like WhatsApp and Apple FaceTime are entirely free. Even Microsoft's own Skype, which used to be the standard for video-calling, is free for most calls.
"I would guess most of the big spikes [in Zoom] with all these new use cases like socializing, and then the classes and all that stuff, is free users. I can't imagine why they would want to switch to Microsoft," Rishi Jaluria, an analyst at D.A. Davidson, told Business Insider.
At the same time, another analyst says, Microsoft may yet pull this off. If Microsoft can market it correctly, consumers might turn to Microsoft 365 to keep all of their email, calendaring, and chat needs in one place, given that both professional and social lives have moved online amid social distancing mandates.
Why Zoom is beating Microsoft
Microsoft dominates in the workplace with its productivity software, and has racked up 44 million daily active users for Microsoft Teams as of March 19 - with huge growth amid the coronavirus-driven remote work boom.
A big part of Teams' enterprise success is that it comes bundled with the Office 365 suite, which includes cloud-based versions of Word, PowerPoint, Excel, and other ubiquitous business software standards. If you want just one, you need to subscribe to them all. The same will be true of Teams for consumers, which will come in this new Microsoft 365 bundle.
In the workplace, this approach has been challenged by the likes of Slack, Airtable, and even Zoom, all of which have seen some degree of success by offering a very specific tool, on an a la carte basis. That's similar to the problems that Microsoft will face when going after consumers, where it'll have to pitch its comprehensive suite against purpose-built chat apps, again like Zoom.
"The question regarding Microsoft's success with families is the same as the corporate world: Will families embrace a product that provides multiple ways to collaborate or are they happy switching between apps and won't bother changing," asks Larry Cannell, an analyst at Gartner.
Another thing is that Microsoft Teams isn't entirely new, given that its video-conferencing technology is based on the legacy Skype for Business, which it replaced for business users. Zoom, meanwhile, was built from scratch for this very specific purpose. D.A. Davidson's Jaluria expects that this is just one more factor that helps Zoom and hampers Microsoft when it comes to winning over loyal users.
The value Microsoft offers
Some analysts argue that Microsoft's position is actually stronger than it may first appear - if the company can nail the marketing.
With everybody out to find new ways to socialize while being stuck at home, having a whole bunch of apps that covers both their professional and personal lives could be appealing, said Dan Newman, an analyst at Futurum Research.
"With the rise of COVID-19 and the at-home economy and social distancing people are trying to find ways to continue to engage in multiple platforms. And maybe part of what we've come to realize is we have so many disparate platforms. How do we streamline it?" he said.
To that point, Microsoft Teams integrates with all the other Office 365 apps, from Excel to Outlook, so you can chat with your family, track your personal calendar, and manage finances all in one place.
Besides, if people already use Teams or Office 365 in general at work, the consumer suite could draw them in, he said. But he acknowledges that the challenge will be getting people to pay for the suite.
Trevor White, an analyst at Nucleus Research, added that recent controversies over Zoom's stance on privacy might be to Microsoft's benefit.
Security experts have highlighted concerns about a lack of clarity over Zoom's privacy policy, even as trolls or hackers infiltrate Zoom calls to share indecent images or other spam, in a phenomenon called 'Zoombombing," has become a concern. Earlier this week, the New York Attorney General sent a letter to Zoom with questions about its security measures.
In response to the criticism,Zoom CEO Yuan apologized for the videoconferencing service's many privacy and security issues, in a blog post published Wednesday, saying that the tool was originally built to service businesses with dedicated IT departments, not millions of consumers. He outlined a series of steps Zoom will take to make the platform safer.
Microsoft, meanwhile, has the advantage that its privacy policy is well-known, and has been refined over a number of years, making it a known quantity and perhaps ultimately a more trusted brand.
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