This content is part of the Conference Coverage: Microsoft Ignite 2017 conference coverage

Microsoft Teams to replace Skype for Business Online

Over the next couple of years, Microsoft will gradually replace Skype for Business Online with Teams, which will become the communications client for Office 365.

Microsoft plans to replace Skype for Business Online with the Teams collaboration service, a move likely to have...

the greatest effect on companies using the video conferencing software for on-premises or cloud-based telephony.

Microsoft will replace the Skype for Business user interface with the Teams UI, while continuing with the Skype communications infrastructure, which already powers audio and video communications in Teams. Microsoft announced the transition Monday at its Ignite developer conference in Orlando, Fla.

Microsoft did not provide a timetable for the change, saying it would occur "over time." Analysts, however, expect Skype for Business Online to disappear by 2020.

The switch is significant because Teams will become the core communications client for Office 365, the company's cloud-based business productivity suite with 60 million commercial customers.

What happens to Skype for Business Server?

The transition adds uncertainty to the long-term prospects of Skype for Business Server, the on-premises version of the cloud-based PBX that connects Skype for Business to the public telephone network. Analysts wonder how that product will be affected as Microsoft directs more of its resources to online communications.

"One doesn't know the pace at which they will be making enhancements, since it's no longer a part of their strategic product direction," said Bern Elliot, an analyst at Gartner.

For now, Microsoft plans to conduct business as usual. In the second half of next year, the company will release an upgrade of Skype for Business Server, which provides voice and video conferencing along with PBX services unavailable in Skype for Business Online.

The switch to Teams also brings uncertainty to companies that have swapped their telephone system for the cloud-based version of Skype for Business. That's because there is no commitment on the part of Microsoft to move all functionality over to Teams.

Companies that had a plan to do [Skype for Business] telephony online should review their plans in light of the uncertainty.
Bern Elliotanalyst at Gartner

"It's not certain what will be available when -- especially when it comes to some of the functions like telephony," Elliot said. "Companies that had a plan to do [Skype for Business] telephony online should review their plans in light of the uncertainty."

Meanwhile, Microsoft is beefing up telephony in Teams. At Ignite, the company is announcing the ability to make and receive calls on the public telephone network. Also, Teams users will have the option of placing calls on hold, transferring them to another party or sending them to voicemail.

Despite the telephony enhancements, swapping out Skype for Business Online could be painful for many enterprises that have to train employees to use Teams, analysts warned. However, AFR Furniture Rental, based in Pennsauken, N.J., believes the additional features in Teams will be worth the move for the company's 500 Skype for Business users.

"I think it's going to be a pretty easy integration for Microsoft to do," said Steven Singer, manager of information systems for AFR. "I don't see a real downside, outside of training, and training is temporary."

The market trend that killed Skype for Business Online

Microsoft's decision to fade out Skype for Business Online is a response to companies demanding more communication functionality in group messaging applications, which are growing in popularity among employees, analysts said. Microsoft's biggest rival, Cisco, is similarly focused on its competing Spark product.

A survey of 700 companies found that nearly half had rolled out team chat apps enterprise-wide or were planning to do so, according to Nemertes Research, based in Mokena, Ill.

The trend toward group messaging services means software-based phones like Skype for Business, which also provide messaging and limited document sharing, are "dead," said Art Schoeller, an analyst at Forrester Research. "All these separate client experiences are collapsing into a team messaging interface."

Discontinuing Skype for Business Online will reduce Microsoft's bloated portfolio of collaboration apps to three -- Teams, Yammer and Office 365 Groups.

"The Teams interface is much better suited to group, persistent collaboration, and it provides clarity around what so far has been a confusing array of Microsoft collaboration tools," said Irwin Lazar, an analyst at Nemertes Research.

Also at Ignite, Microsoft will announce that Teams will get tighter integration with SharePoint, which is the company's document management and collaboration tool. Pages and communication sites people create in SharePoint will be accessible through Teams.

Yammer is also on tap to get tighter integration with SharePoint, as well as changes to data handling to meet the compliance requirements of many enterprises.

Next Steps

How is your organization preparing for migration from Skype for Business to Microsoft Teams?

Microsoft Teams features that matter

Choosing between Microsoft's and Cisco's UC cloud

Dig Deeper on Collaborative Applications