Microsoft could preempt Slack legal challenge with unbundled Office

  • Microsoft is set to release a one-time purchase license for Office in 2021.
  • This could help fend off legal challenges from Slack if the updated Office suite isn’t bundled with Teams.
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Though Microsoft has been attempting to steer consumers toward its Microsoft 365 subscription service (previously named Office 365), the company announced this week that a perpetual license version of Office would be released for both Windows and Mac in the second half of 2021.

Global IT devcision makers expect to reduce use of commercially licensed software in favor of SaaS

Microsoft could preempt Slack legal challenge with unbundled Office.

Business Insider Intelligence

Significantly, this shows Microsoft isn’t ready to abandon the one-time purchase software model, even if the future of enterprise software looks to be firmly rooted in Software as a Service (SaaS). Microsoft last released a perpetual license version of Office in 2019, which included Word, Excel, PowerPoint, and several other programs (with the notable exception of Teams), per WindowsCentral.

By selling an updated, perpetual license version of Office without Teams, Microsoft would be better positioned to fend off a legal challenge from Slack. Microsoft bundles its enterprise communications platform Teams with Microsoft 365, which means Microsoft has effectively rendered Slack redundant for the millions of enterprises that already purchase Microsoft 365.

This makes Slack a conspicuous target for IT cost-cutting, reflected in the trajectories of the respective services—Microsoft Teams more than doubled daily active users in the period spanning March to May 2020, while Slack reported an uptick in user churn and a decrease in account expansion during the first six months of 2020. In May Slack CEO Stewart Butterfield told The Verge, “Microsoft is perhaps unhealthily preoccupied with killing us, and Teams is the vehicle to do that.”

Then in July, Slack filed a competition complaint with the European Commission, challenging Microsoft’s practice of bundling Teams with the Office suite. Microsoft could deflect some of this scrutiny by launching the perpetual license Office bundle without Teams, giving enterprises the option to purchase the most recent suite of Office apps as a standalone product.

However, even if Microsoft takes this approach, it likely wouldn’t cannibalize much of the Microsoft 365 market share. One of the ways Microsoft steers consumers to Microsoft 365 is by promoting features that are uniquely enabled by the SaaS model. For instance, Microsoft 365 comes with OneDrive cloud storage subscription and ongoing security detection.

The pandemic has also accelerated enterprise digital transformation, and SaaS is an integral part of that process—Insider Intelligence released its SaaS Explainer report this week, which outlines some of the key factors driving enterprises to adopt SaaS, including a more predictable payment structure, support for flexible work environments, reduced IT workload, and timely access to software updates. On average, large enterprises (1,000+ employees) subscribe to 288 SaaS apps, spending $2,046 per employee on subscriptions, according to HubSpot’s 2020 SaaS Trends Report.

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