Zoom (ZM) drags 7% lower as Microsoft (MSFT) cuts Teams cost
21:11, 1 December 2021
Shares in Zoom Video Communications were down as much as 7% on Wednesday after rival Microsoft introduced a new low-cost tier of its Teams communication service for small businesses that undercuts what Zoom offers.
Microsoft announced plans to sell its Teams work messaging communication service as a stand-alone product on Wednesday, rather than software that can only be purchased as part of the larger Office 365 bundle.
At $4 per person per month, “Teams Essentials” comes in below Zoom’s “pro” offering at $14.99 or its “small business” plan at $19.99 per license per month. Both companies also have a free tier.
“We know how difficult the past 20 months have been for small businesses. They’ve had to demonstrate extreme flexibility to adapt, often with limited access to tools and technology,” Jared Spataro, corporate vice president of Modern Work at Microsoft, said in a press release. “Teams Essentials is built specifically to meet the unique needs of small businesses, enabling them to thrive in this new era of work.”
With Teams Essentials, small businesses can get group meetings for up to 30 hours, meetings with up to 300 people and 10GB of cloud storage per user.
For $16 more, Zoom’s small business plan provides the same 30 hours of group meetings, the same 300 participant limit on calls and but only 1GB of cloud storage. Also, Zoom does not have the same chat function that rival apps Teams and Slack have.
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Zoom shares closed at $197.7 per share, down 6.48% off the prior day’s close. Year to date, the shares are down 45% as it comes off the high it reached during the peak of the pandemic when consumers were stuck inside Zooming with relatives and friends.
Microsoft shares were up as much as 2.6% during intraday trading but closed the day at $330.08 per share for a 0.15% loss in the final minutes of trading.