Wednesday, November 23, 2016

Would Slack be able to overcome Microsoft Teams threat?


Microsoft recently launched Microsoft Teams to compete with Slack as the workplace communication and collaboration software. While this launch from Microsoft was much talked about already but Slack CEO Stewart Butterfield's open letter to Microsoft added an unexpected flavor to the duel.

What really is Slack ? As per Wikipedia- Slack is a cloud-based team collaboration tool. The name is actually an acronym, which means, "Searchable Log of All Conversation and Knowledge". Slack was launched in August 2013.

...And What is Microsoft Teams? Microsoft prefers to call Microsoft Teams as a new chat-based workspace in Office 365. As it defines, Microsoft Teams is an entirely new experience that brings together people, conversations and content—along with the tools that teams need—so they can easily collaborate to achieve more.

Given the fair share of success that Slack has had so far, it can be credited for being a creator of this new product category and Microsoft a competitor. What could be potential factors against which we can size up the competition between the two?

A battle of a Product and a Feature:
Though it is touted as a battle among the equals, there is a fundamental difference between Slack and Team. Slack is a product. Microsoft Teams is a feature. Teams is a part of comprehensive Office 365 suite. Office 365 does many things but Slack is laser focused on being a office messaging app.

Microsoft Teams- almost at feature parity with Slack:
Microsoft is looking at Teams more as a software that unifies many of their existing applications. As Satya Nadella said recently
"Just like Outlook brought together email, contacts and calendar into one magical user experience scaffolding that changed how we worked, Teams will bring together chat, meetings, notes, Office, Planner, Power BI... and other extensions and applications to help users get work done,"

Beyond Unification of existing office apps, Microsoft Teams already mirrors quite a few features of Slack as is evident in this comprehensive feature analysis between the two.

Strategy to Gain users:
Building a software product for sure is hard, but not many realize the complexity of ensuring a successful go-to-market of software products. The strategy to gain users often becomes a key differentiator between the competing products.

Microsoft Teams doesn't plan to go freemium in attempt to gain users. Freemium model is when the offering has some "free" features (to attract the users) and some "premium" features (to lure users to pay for more beneficial features). The fact that Teams is an Office 365 feature is its biggest strength. Through this association, Teams gains an access to enormous number of Office 365 customers. 
On the contrary, Slack runs on Freemium model. One of the better ways to introduce new product to users is through this model. This has ensured initial usage of slack and helped in building the much-needed credibility. According to an recent user estimate, Slack has over 1.25 million users worldwide and 33000 paid teams using it. 

Market Segments:
Microsoft Teams has a unique advantage of leveraging the large enterprise customers that Office 365 might already have. Whereas Slack, being a start-up won’t have that luxury. Slack at the moment has been gaining a good traction in both smaller and larger enterprises.

External Collaboration:
Slack allows for an easy participation of team members outside the organization. Since Microsoft Teams is bound with Office 365 subscription, it doesn't have an easy (or rather any) way to allow external audience from participating in the communication. Given the complex nature of collaboration in today's world when partners beyond existing employees often help with the decision making, not having this feature could prove to be a deterrent. This feature is said to be on the roadmap of the Teams software.

Leveraging Artificial Intelligence:
There are a still a few years before AI becomes a routine feature. Atleast for now, AI is one of the key differentiator among the software products. Both Slack and Microsoft Teams have leveraged AI by introducing task specific bots that help team collaboration. As an example, Microsoft Teams has a bot called T-Bot that is available to answer questions during the conversation, then there is a WhoBot who helps to answer questions about the team members. Meanwhile Slack seem to be overrun with many bots that users already seem to have gotten a good taste of.

Open Platform vs Closed Ecosystem:
As Slack CEO says in his open letter to Microsoft-
an open platform is essential. Communication is just one part of what humans do on the job. The modern knowledge worker relies on dozens of different products for their daily work, and that number is constantly expanding. These critical business processes and workflows demand the best tools, regardless of vendor.
That’s why we work so hard to find elegant and creative ways to weave third-party software workflows right into Slack. And that’s why there are 750 apps in the Slack App Directory for everything from marketing automation, customer support, and analytics, to project management, CRM, and developer tools. Together with the thousands of applications developed by customers, more than six million apps have been installed on Slack teams so far.

This is an area where slack probably scores over Microsoft. Microsoft has a reputation of being a closed platform, or atleast not as open as modern platforms like Amazon, Facebook and Google. It does warrant a mention that Microsoft, under Satya Nadela is working towards fixing this aspect of the business by embracing Linux, building software for Mac etc.


In product management, there are different strategies that either help first-mover (Slack) consolidate an early advantage or there are strategies that help fast-follower (Microsoft) learn from the mistakes of first-mover and emerge stronger. Microsoft has been a dominant force in the Enterprise Office software category. Given its openness, Slack is touted by many a analysts to replace email and other office communication software. The positioning of Slack in the Unicorn category and its ever-increasing popularity has certainly made Microsoft a bit nervous. On the other hand, Microsoft has a huge muscle power built by the enormous piles of cash and a strong network of partners which won't let it reach Obsolescence any time sooner. 

It’s hard to predict who wins this battle eventually but it is certain that this new category of software enabling Office communication is here to stay and there would be room for many a players to seize the initiative. Microsoft's entry in this space only validates the need of this product category. So far Slack seems ahead and Microsoft seems well positioned to play the catch-up game for next few quarters atleast.


What do you think ?

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