In 2018, the market for corporate chat software is dominated by a single vendor: Slack.
It was recently revealed that Slack will be raising another $400 million in fresh capital. One year ago, $250 million had already flowed into the company’s coffers. Slack is currently valued at $7 billion.
These are impressive figures. But Slack is by no means an IT giant. Compared to Microsoft (130,000 employees) or Google (85,000 employees), Slack (1,000 employees) is an underdog.
Nevertheless, Slack’s rapid rise was a wake-up call for the big tech companies. Suddenly, everyone wanted a piece of the action. The product announcements came thick and fast in 2017.
One year later, and the party’s already over.
Only once Slack CEO Steward Butterfield became visibly nervous: when Microsoft announced a Slack-killer simply called Teams. Butterfield’s response — taking out a full-page ad in the New York Times — was jumpy. And, as it turned out, unnecessary.
Today, Microsoft is the only large corporation still openly competing against Slack. 200,000 organisations are already reported to be using Teams. A respectable result, even in comparison to Slack with its 500,000 organisations. But this still has to be put into perspective.
Because practically nobody is paying for it. If it wasn’t free, there’s a good chance that Teams would have flopped.
And that’s even with Microsoft starting from the best possible vantage point: over a billion people use Office. 120 million people pay for an Office 365 subscription, and Teams is included for free in that subscription.
A gigantic distribution channel, an overwhelming market force and a free product. And Slack still wasn’t swept off the market. Why not?
The weak spot is in the product itself. Microsoft Teams is by no means as user-friendly as Slack. Users complain about the less intuitive interface. Unlike Slack, Teams is not loved.
Microsoft is keeping mum about how much it’s being used. Daily active users? Daily sent messages? There’s not a word about any of this.
Anyway, Microsoft isn’t giving up and is investing.
As opposed to the other IT giants:
IBM launched a team chat with the catchy name of Watson Workspace. They probably weren’t taking it too seriously — IBM itself is now Slack’s biggest customer, with 110,000 employees.
Google’s product has the somewhat clunkier name of Google Hangouts Chat. It’s included for free in the G Suite, but hardly anybody uses it. Google doesn’t seem to be investing seriously in Hangouts any more.
Facebook Workplace Chat is a close cousin to Facebook Messenger. Although it has some potential, it lacks many of the important functions it would need for measuring up to Slack.
Salesforce offers Chatter, probably the least-known competitor. The product is so well hidden on the Salesforce website that it’s hard to discover.
Cisco’s Webex Teams is used by some enterprise customers as an extension to its video conferencing solutions, but it lacks any real market relevance.
And now even Atlassian, the former industry pioneer, has thrown in the towel. Stride, Atlassian’s response to Slack, didn’t come out until late 2017. Now, like Hipchat, it has been sold to Slack in exchange for Slack shares. The plug is being pulled on its data centre as early as February 2019; by then, all customers will need to have migrated to Slack.
Slack no longer has anything to fear from the IT industry’s heavyweights. The big boys surrendered before the fight ever really got started.
Why?
In every case, the main reason was the product. Too carelessly, too hastily thrown together, too awkward to use. If you can’t win over the users’ hearts, you don’t stand a chance in the chat arena.
Some have tried offering a (more or less obvious) clone of Slack. None of them were any more than pale imitations. You can’t wrap up the market like that.
The corporations’ paralyzation is surprising.
A team chat is no minor, marginal product; it’s a strategic node, right at the heart of the workplace. The users live in the chat, everything meets right there in the middle. On average, Slack users are logged on to the system for 10 hours per day and spend a substantial proportion of their working time using it.
What’s more, the market is growing incredibly fast. In a few years, Slack could reach the billion turnover mark.
If anyone is going to threaten Slack, they’ll need a product that is better than the market leader’s. Slack is by no means invincible, and Butterfield knows that too.
For us, as a small, new provider of a team chat solution, this is an exciting starting point.
Our opportunity is creativity: using better ideas to develop a product that enables the user to work more effectively.
There’s still a long road ahead of us, and we know that.
Liza Team Chat has been in the public beta phase since August 8, 2018.
