Passwords have always been a double-edged sword in the world of cybersecurity. They're essential, but also easy to guess, reuse, phish, or forget. That’s why Microsoft is ramping up efforts to eliminate them altogether with passkeys, offering what they call a simpler and more secure way to sign in.
But as with most big shifts in technology, the move to passkeys comes with some fine print, and a few potential headaches.
What Are Passkeys, and Why Now?
Passkeys are a modern form of passwordless authentication that rely on cryptographic keys rather than typed credentials. Instead of remembering a complex string of characters, users authenticate with something they are (like a fingerprint or facial scan) or something they have (like a trusted device).
In theory, it's a win-win: better security with less user friction. Microsoft is leaning hard into this model, with recent updates making passkeys the default for new accounts and encouraging existing users to remove passwords altogether.
What’s Changing with Microsoft?
As of May 2025, Microsoft has started rolling out the following updates:
1. Passwordless by Default – New Microsoft accounts now skip the password step entirely, defaulting to passkeys.
2. Modernized Sign-In – Sign-in prompts will prioritize the most secure method available, often defaulting to biometrics or device-based passkeys.
3. Entra ID Integration – Enterprise users now have support for both device-bound and syncable passkeys, offering IT admins more flexibility depending on their risk tolerance and environment.
This shift aligns with broader industry efforts from Apple and Google to create a shared, passwordless authentication ecosystem. But it also signals a turning point: Microsoft is clearly preparing to phase out password support entirely in the near future.
The Real-World IT Perspective: Important Considerations Before You Dive In
As promising as passkeys are, it’s important to recognize the operational realities, especially for IT teams tasked with supporting end users.
One challenge we foresee is what happens when a user replaces their phone. If their passkey is stored in Microsoft Authenticator and the app wasn’t properly backed up or restored, they could lose access to their credentials. In these cases, re-establishing access may not be as straightforward as resetting a password.
This isn’t a dealbreaker, but it does mean organizations need to plan carefully. Having a well-documented recovery process, training users on backup procedures, and ensuring mobile device policies are in place will be key to avoiding unnecessary disruptions.
The technology is moving in the right direction, but the transition period may bring more support requests related to Authenticator setup and device changes. A smooth rollout will depend just as much on communication and support as it does on the tools themselves.
Is It Worth It for Businesses?
Yes, with caveats. Passkeys offer strong resistance to phishing, eliminate the risk of password reuse, and reduce exposure to credential stuffing attacks. For organizations with high security requirements (finance, healthcare, legal), they’re a compelling step forward.
But the transition needs planning. Businesses should consider:
· User education – Clear instructions on how to back up Microsoft Authenticator and restore credentials
· Device management policies – Enforced mobile management can help smooth out some of the rough edges
· Contingency workflows – What’s your plan when a user loses a phone with their passkey on it?
This isn’t just a technical shift, it’s a behavioral one. And like any change in user behavior, it comes with resistance and support challenges.
Looking Ahead
Microsoft’s passwordless vision is exciting, and from a security standpoint, it's the right direction. But we’ve got to be realistic. A passkey-centric world is coming, but it’s not going to be painless. Organizations should start experimenting now, with a plan for training, recovery, and support.
Because while passwords may be on the way out, people problems will still be front and center.
Need help planning your passwordless transition? If you're weighing the pros and cons of passkeys in your environment, OXEN can help you assess readiness and create a smart, phased rollout strategy.
FAQ: Microsoft Passkeys and Your Business
Q: What happens if a user gets a new phone and their passkey was stored in Microsoft Authenticator? A: If the Authenticator app wasn't backed up or restored properly, the user may lose access to
their passkey, meaning they'll need to go through a recovery or re-registration process. This is why user training and clear mobile backup policies are essential during rollout.
Q: Can passkeys be used across devices? A: Yes, syncable passkeys can be used across multiple devices if they're tied to a user’s Microsoft account and properly backed up. Device-bound passkeys, however, only work on the original device, which adds complexity for mobile users.
Q: Should we disable passwords entirely? A: Not yet. While Microsoft is heading that way, most organizations will need a hybrid approach during the transition. We recommend enabling passkeys alongside passwords at first, then phasing out passwords as users get comfortable and support systems mature.
Written by Ken Gulick, Professional Services Team Leader - OXEN Technology
