Microsoft Poised to Benefit from Growing Work-From-Home Security Concerns

Zoom's losses could be Microsoft's gain, according to one analyst.
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Microsoft is notching gains in Teams, its workplace collaboration product . And it looks to be in a strong position to reap lasting growth from the coronavirus pandemic, too.

On Thursday, Microsoft said that Teams has seen swelling engagement over the past few weeks: Since mid-March, the total number of minutes spent in Teams meetings increased by 200% to 2.7 billion. Meanwhile, total video calls grew 1000% in March, the company said, with overall usage on mobile also growing in countries hardest-hit by the virus. 

Shares of Microsoft  (MSFT) - Get Report were roughly flat on Thursday at $165.14.

Naturally, Microsoft isn't the only beneficiary of new remote work procedures in the pandemic. Slack  (WORK) - Get Report, Zoom  (ZM) - Get Report and others have seen dramatic spikes in usage since the onset of the health crisis. Google  (GOOGL) - Get Report also reported an increase in paying customers of G Suite, although it's unclear how much of that is tied to coronavirus. 

Microsoft also reported that in China -- where the rate of new infection reports has tapered off -- the number of daily active Teams users "continues to grow week over week," wrote Jared Spataro, vice president for Microsoft 365. 

Microsoft 365, the company's broader work suite that includes Teams, had 200 million monthly active business users as of last October. 

Tech firms offering productivity software are adjusting their strategies to the rapidly changing times, and in some cases stumbling in the process of meeting demand. 

Users of Zoom, the popular videoconferencing software, reported a slew of privacy and security issues with the app over the past few weeks, accusing the company of security lapses and a lack of clarity about data privacy practices, among other things. In short order, organizations including New York City's Department of Education, SpaceX and Google have restricted or banned the use of Zoom.  

Ease of use and connection stability seem to be the primary reasons for adoption of various "work from home" platforms thus far, according to Scott Kessler of investment research firm Third Bridge. But going forward, rising awareness of security issues could boost Microsoft, he said. 

"Obviously [Zoom] is now dealing with concerns related to security and data privacy, with a number of schools and government entities now discouraging or even banning [its] use" he said. "Microsoft Teams is positioned to benefit, as there has been a focus on security, according to an expert we spoke with. NYC schools were told to switch from Zoom to Teams. And Microsoft recently announced Teams for families and personal use.

Microsoft often touts its security standards in its enterprise products: In a recent press release, it outlined Teams' privacy and security practices and asserted that "privacy is deeply ingrained in our company philosophy and how we build products." 

Meanwhile, the company on Thursday also reported gains in Teams for Education, saying it now has 183,000 so-called "tenants," many of them school districts, using Teams for Education in 175 countries.