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A Tale of Two Messaging Apps

The summer of 2012 was the best of times. Microsoft announced that it acquired Yammer, a four-year-old social networking company for businesses. The press release stated, “Yammer adds a best-in-class enterprise social networking service to Microsoft’s growing portfolio of complementary cloud services.”
 
The operative word there was “growing.” Last quarter, Microsoft's commercial cloud revenue, which consists of revenue from Office 365 commercial, Azure, and Dynamics 365, increased to $11.6 billion. With cloud revenues, Microsoft has grown its business further, solidifying itself as one of the most valuable companies in the world.
 
However, Yammer doesn’t seem to have played a significant role. Yammer became somewhat of a footnote in the Office 365 story, and for the past several years, it has lived in the shadow of Teams, Microsoft’s other messaging application. #YearOfYammer was one of the surprising hashtags from Ignite last week.
 
Teams and Yammer are perceived as very different, but they have significant overlaps. Pop quiz: a message, perhaps a gif image with an @mention, is shared with colleagues. It features the author’s avatar and name, a date stamp, and offers response buttons such as like, edit, and reply. Is it Yammer or Teams?
 
The message could be from either – both apps can be used for individual or group interactions, and messages can be public or private conversations. Of course, they have different functionality. Teams includes a solution for meetings, telephony services can be added, and it's optimized for interactive conversations, where Yammer is optimized for a newsfeed.
 
Is Two Really Better than One?
For the past few years, I’ve questioned the need (for Microsoft and its customers) to have two messaging apps. When I ask about Yammer and Teams, the responses tend to be about positioning rather than technical differences. For example, I’m told that Yammer is for less urgent communications (days/weeks), and Teams is better for faster interactions (hours/day). However, that’s a use case, the platforms deliver messages at about the same speed.
 
Yammer has more scalability, and Microsoft doesn’t even state a maximum number of users. Teams has a maximum team size of 5,000 users. Though a big number, it makes Teams unsuitable for large, enterprise-wide messaging. Microsoft has been putting a lot of emphasis on teams, so I assumed it to be a far, far better messaging application.
 
Last week at Ignite, we learned that Yammer received a complete redesign with dozens of new capabilities and integrations. Yammer is the first Office 365 application built using Microsoft’s new Fluent Design system. Yammer is now a state-of-the-art Web app; Teams is a traditional (fat) client. This was a big surprise. Teams is less than three years old. I had assumed that its limitations would be addressed in various updates and that it would eventually replace Yammer.
 
Beyond the new look and feel, Yammer received many new features and integrations. Messages now support polls, praise, and pinning. Groups are now communities. There are enhanced ways to discover content such as improved search and new conversation filters. The new Yammer supports Live Events. In other words, the overlap between Yammer and Teams increased.
 
#YearOfYammer at Ignite was the worst of times for Teams. While Yammer got a big refresh, the announced updates for Teams were relatively incremental. There was no update on guest users. No mention of enterprise key management, or an increase to the 5,000-member limit. Both Lori Wright and Bob Davis, the two most visible executives leading Teams, moved to other opportunities at Microsoft. Wright’s replacement hasn’t been named. Davis, a corporate vice president, was replaced by Lan Ye, a general manager.
 
Maybe, I had it backwards. Maybe, Yammer is Microsoft’s strategic messaging tool. While Microsoft had its eye on Slack, both Zoom and Facebook have made significant advances into the enterprise. Zoom did so with simple meetings, and Workplace by Facebook is leveraging familiarity.
 
The new Yammer is only a week old and can’t replace Teams today. For example, Yammer doesn’t support meetings. However, Microsoft has already built and moved meetings before. Microsoft transitioned the meetings services associated with Skype for Business (and Skype Meeting Rooms) to Teams (and Microsoft Teams Rooms). The same is true for UCaaS.
 
Yammer in the Enterprise
Look how far Microsoft got with Teams in less than three years. It’s not hard to imagine a totally new Yammer emerging. Among the updates, Yammer is now integrated into Outlook, SharePoint, and even Teams. It has a growing library integrated third-party applications.
 
Teams may not be well suited for enterprise-wide communications and collaboration. Microsoft built Teams to beat Slack and did, but Slack isn’t generally considered an enterprise-wide application either. In September, Microsoft reported Teams had 13 million daily active users, and Slack last month reported it only had 12 million. While that’s great news for team Redmond, Microsoft also reported that Office 365 has 200 million monthly active business users — all of which have access to Teams.
 
The UCaaS add-on for Teams isn’t being adopted as quickly as many of us expected. Many SfB Server customers remain reluctant to migrate to Teams. Telephony is almost always an enterprise-wide application. Perhaps that is why Slack doesn’t natively offer UCaaS or meeting services.
Conversely, the new Yammer is positioned as a broad, enterprise-wide solution. According to the associated blog post, the new Yammer will “power leadership engagement, company-wide communication, communities, and knowledge sharing in Microsoft 365.”
 
Yammer is positioned competitively against Workplace by Facebook, which recently revealed it has 3 million paid subscribers. Workplace grew subscribers 50% in just eight months. For comparison, Slack recently reported about 100,000 paying subscribers (Microsoft hasn’t shared usage figures for Yammer). Microsoft needs to respond to Workplace by Facebook and Slack, but does it require two apps to do so? It’s a Dickens of a problem.
 
Enterprise-wide services are a big part of the value of Workplace by Workplace. The application’s ability to serve firstline employees is a core feature. Microsoft put its firstline initiative on Teams with apps such as Shift. However, Teams isn’t a natural fit for most shift workers, though the announced SMS passcode for authentication will help next year.
 
I’m now thinking that Yammer is just a few updates away from feature parity with Teams, or perhaps parity isn’t strong enough. Yammer already supports large organizations, guest users, intercompany federation, and it just got upgraded compliance capabilities. Yammer could emerge as the more strategic enterprise-wide messaging service for social networking and collaboration that supports inner and outer loop communications.
 
Teams won’t likely go away. It’s a successful and robust application. Teams could become (or already is) a more specialized application such as Office 365’s Sway or Flow. Teams fosters collaboration for close-knit, interactive teams.
 
Of course, I could be dreaming. To quote Charles Dickens, “All a dream, that ends in nothing, and leaves the sleeper where he lay down, but I wish you to know that [enterprise-wide messaging] inspired it.” Well, maybe not quoted word for word.
 
Dave Michels is a Contributing Editor and Principal Analyst at TalkingPoitnz.