Microsoft set to own collab market by 2020. Can Slack's innovation win out?
The difference between the two companies is "safety over sex appeal."
Software is only as good as its adoption rates and no company in Silicon Valley knows that better than Microsoft.
The "Redmond Monster's" strongest asset is its one-stop-shop marketability, which helped adoption rate of its collaboration platform Teams sneak up on the market's incumbents, namely Slack.
Though Slack is the market's pioneer, Microsoft Teams is projected to outpace Slack's adoption rate in two years, according to a Spiceworks survey of about 900 respondents. Teams' adoption rate is set to double Slack's by 2020.
"Collaboration technology vendors like Slack can only sustain hockey-stick-like growth for so long," said Carrie Basham Young, principal and CEO of Talk Social to Me, in an email to CIO Dive. "At some point, they saturate the enterprise and can't acquire new users at the same rate."
The Redmond Monster
The communication platform market is expected to be worth $49.5 billion by 2021 driven by the allure of more personal, faster and multi-functional collaboration methods.
Slack noticed this trend years ago. Google and Facebook quickly followed, as did Microsoft in March 2017.
In September, Microsoft declared Teams its fastest growing app in company history after racking up 329,000 organizations less than two years after its launch. Slack, with about a four-year head start, is used in 500,000 organizations.
Teams is accessible through Office 365 with no additional costs. Analysts predicted it was just a matter of time before business customers clicked on every application available in the suite, which meant opening Teams.
A month before its historic announcement, Microsoft officially listed Slack as an Office competitor, a move Slack considered an "honor," Ilan Frank, head of enterprise product at Slack, told CIO Dive in October.
Though Slack has added crucial tools to attract more enterprise customers, companies with 100 or less employees are more likely to use the platform, according to Spiceworks. About 13% of large businesses, or those with more than 500 employees, use Slack. One-quarter of large businesses use Teams.
"I don't foresee users revolting if IT comes in and replaces Slack with Teams" because "side by side, the products are really similar in their DNA."
Carrie Basham Young
Principal and CEO of Talk Social to Me
Tools that are synonymous with enterprise productivity include Word, Excel, PowerPoint and Sharepoint, and Microsoft wants to add Teams to that list. Microsoft's competitive strength is its "ability to give away functionality at no cost," Peter Tsai, senior technology analyst at Spiceworks, told CIO Dive.
The Office 365 bundle is a software powerhouse that's hard to compete against — it's a staple in most businesses.
Office 365 offers companies data governance and secured authentication through Azure Active Directory, something other platforms can't compete with, Dux Raymond Sy, CMO at AvePoint, told CIO Dive. "These features make Microsoft Teams a more compelling platform to adopt."
As part of the Office suite, Teams' ability to integrate with other Microsoft apps is seamless, but Microsoft can't rely solely on that selling point. Other market competitors have the ability to win over customers who aren't married to Microsoft products.
And Microsoft can get in its own way. Even though Skype for Business, owned by Microsoft, is projected to be used in more than half of businesses by 2020, the company is causing heartburn for Skype customers.
As the company continues to push Teams, it's starting to overshadow Skype. This is, however, a strategic move for Microsoft and Teams because Slack hasn't completely conquered voice and video.
It also doesn't hurt that respondents also said Teams was the most secure, cost-effective and manageable communication platform, according to Spiceworks. Still, Slack held onto its "most innovative" title, "presumably because it launched years before Microsoft Teams," according to Tsai.
Can Slack keep up?
Even though Slack acquired the intellectual property of Atlassian's HipChat and Stride, "HipChat was too small of a player to add much to Slack's early lead," said Tsai, not to diminish the fact Slack still took out an entire competitor this year.
There are companies which have departments using the free version of Slack "under the radar of IT," said Basham Young.
Slack is often viewed as the platform most preferred by users because Microsoft is intrinsically linked to a corporate feel. "Microsoft hasn't traditionally been on the bleeding edge," said Raymond Sy, but it has produced products that can benefit its entire customer base. "Similar to how Microsoft Office has thrived and dominated the productivity tools market, I believe that they are taking the same approach for Microsoft Teams."
But the number of under the radar Slack use-cases is threatened by Teams' "IT-approved alternative" because of its Microsoft association, said Basham Young. "I think that the enterprise will choose safety over sex appeal with collaboration tools."
Despite the projected imbalance of users in the years to come, the communication platform market "was not necessarily Microsoft's market to lose," said Tsai. Moving forward the market's top players cannot rely on price to compete.
Instead, companies need to innovate and "find a niche that isn't well served by Microsoft Teams," he said.
The content collaboration platform market is projected to hit its plateau within the next two years, according to Gartner, but workstream collaboration has another five years before reaching its plateau.
This gives all companies in the communication market the chance to broaden capabilities and gain users. Right now "I don't foresee users revolting if IT comes in and replaces Slack with Teams," said Basham Young, "because side by side, the products are really similar in their DNA."
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