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Microsoft blocks cloud Skype sign-ups for small businesses

Microsoft will soon block new small-business sign-ups for cloud Skype for Business, as the vendor is getting more aggressive in its campaign to transition customers to Microsoft Teams.

Jonathan Dame
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Published: 26 Sep 2018

ORLANDO, Fla. -- Microsoft will soon stop companies with fewer than 500 employees from joining Skype for Business Online, and it has begun proactively initiating upgrades from that client to Microsoft Teams for existing small-business customers.

The move signals that Microsoft may soon announce the date it will retire the cloud-based version of Skype for Business. The vendor surprised customers one year ago when it said Microsoft Teams would eventually replace the platform.

"We want to start migrating the less complicated customers first," said Lori Wright, general manager of Office 365 collaboration apps, in an interview at the company's Ignite conference.

"Once we go through that process, we learn some stuff as part of that, [and] we feel really good about it, we'll set the deadline [on retiring Skype for Business Online]," she said.

Microsoft has already started emailing small-business customers on a rolling basis to inform them that their organizations will be automatically migrated from cloud Skype to Teams -- unless they opt out.

On Nov. 1, Microsoft will begin automatic upgrades for small businesses that bought Office 365 through a channel partner. Larger organizations, as well as small companies that decline the automatic update, can continue to use cloud Skype indefinitely.

Meanwhile, Microsoft Teams will be the only unified communications client available to small businesses that purchase a new subscription to Office 365 after Oct. 1. That suggests Microsoft believes the platform is ready to support the needs of small organizations.

Microsoft has encouraged larger businesses to spend a period running Skype for Business Online and Teams simultaneously before switching, and it recently made the two platforms interoperable for messaging and one-on-one meetings.

Small businesses face Skype-Teams migration challenges

SAGlobal, a global IT services company, started migrating 600 users from Skype for Business Online to Teams in February. Users have complicated the process more than the technology has, said Ragnar Sigurdsson, global IT manager at SAGlobal.

"The tech seems to be [ready]; there [are] no issues at all," Sigurdsson said. "It's just about the small changes that [users encounter]."

Adoption rates at smaller branch offices have lagged, and some users feel the interoperability between Skype and Teams doesn't work as well as they would like, he said.

Sigurdsson said he wishes Microsoft would announce a deadline for abandoning cloud Skype. "That gives everyone more incentive," he said. "You can't resist anymore; it's going to change."

The public school district in Concord, N.H., has also struggled to change user behavior while experimenting with Microsoft Teams over the past year.

"Part of it is people don't understand the purpose of [Teams]," said Matt Carlone, the district's systems administrator. "A lot of times, we have created teams for different groups of people, and they don't touch it after we set it up."

Most businesses still in Teams transition period

Around 329,000 organizations have started using Teams, according to Microsoft. But most of those organizations are still in transition, running Skype and Teams side by side, Wright said.

Small businesses comprise a majority of the customers that use Skype for Business Online, Wright said. But Microsoft won't reveal exactly how many companies use cloud Skype, or how that figure compares to the number of on-premises Skype for Business customers.

Many large businesses feel Teams still isn't ready to support their advanced telephony needs. Most of those organizations are still running Skype for Business in their own data centers; some are still using Microsoft Lync.

Hospitals, banks and government agencies are particularly reluctant to adopt a cloud-based communications system. Businesses in those verticals care more about the reliability and quality of voice calls than the new collaboration tools in Teams. 

Microsoft plans to release a new on-premises version of Skype for Business by the end of this year. The 2019 Skype for Business server will support those customers through at least 2023, but it offers limited feature improvements.

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