Microsoft introduces Slack rival to lure business-chat users

Microsoft Teams has team chat, private messages and voice and videoconferencing


The new product is “designed to facilitate real-time conversations and collaboration while maintaining and building up that institutional knowledge of a team,” said chief executive officer Satya Nadella. Photo: AP
The new product is “designed to facilitate real-time conversations and collaboration while maintaining and building up that institutional knowledge of a team,” said chief executive officer Satya Nadella. Photo: AP

Seattle: Microsoft Corp. unveiled a corporate team-chat service that works with its cloud-based Office and Skype products, aiming to take on Slack Technologies Inc. and Atlassian Corp.’s HipChat in a growing market.

The new product is “designed to facilitate real-time conversations and collaboration while maintaining and building up that institutional knowledge of a team,” said chief executive officer Satya Nadella. The product has team chat, private messages and voice and videoconferencing.

Big companies like Microsoft and IBM are showing renewed interest in the corporate-messaging market as customers flock to internet-based tools like Slack for setting up team communications, said Vanessa Thompson, an analyst at IDC. Microsoft relied on Office 365 and other products to rack up almost $10 billion in commercial cloud revenue for the fiscal year that ended 30 June, and is adding services to draw in more customers.

“Microsoft is trying to get more airtime with customers that might want something to augment their existing investment in Office 365,” Thompson said. “What we have started to see is a bunch of companies trying to attack the enterprise versions of WhatsApp and consumer messaging.” IDC hasn’t published a market size or forecast for the space, which it calls workplace application messaging.

A preview of the service, dubbed Microsoft Teams, is available now for Office 365 commercial customers in some versions. It will be generally available in the first quarter and will be included in all Office 365 Enterprise and small business versions.

Coordinated tasks

Microsoft’s product allows teams to add what it’s calling Tabs, to quickly link to frequently used files and applications. These tabs can relate to Microsoft products like the OneNote note-taking program or to outside products—the company said it’s adding support for Zendesk and Asana soon. Teams can also bring in notifications from services like Twitter and GitHub. Like Slack, it also supports the usage of bots—programs that chat with users to automate tasks.

It’s not Microsoft’s first foray into this area—the company paid $1.2 billion in 2012 to buy Yammer Inc., but hasn’t been able to build up the same kind of usage as Slack and HipChat. Slack raised $200 million at a valuation of $3.8 billion in April. The startup, which introduced its product in 2013, said it reached annualized revenue of $100 million over the summer and surpassed 1.25 million paid users. HipChat was founded in 2010 and acquired by Atlassian two years later. That company declined to break out specific numbers for the product.

Microsoft said Teams’ tight connection with Office and ability to do more than chat give it an advantage over rivals, some of which integrate with parts of Office, but not as closely.

“Just creating another persistent chat tool isn’t all that interesting,” said Office vice president Kirk Koenigsbauer. “The notion of having this hub for teamwork is a new spin on it. It’s not for people who just want to have conversations.”

Race day

Nascar racing company Hendrick Motorsports has been trying out Teams and will use it on the track at the Daytona 500 in February, said Matt Cochran, the company’s information technology manager. During a race, Hendrick will use Microsoft’s product to coordinate pit stops and share feedback among teams supporting its four cars. For example, if one car is seeing a certain kind of wear on tires its crew can alert the other three, which have similar equipment, to make adjustments. Chat is important because the crews need information quickly while audio channels of communications are reserved for conversations between the driver and the crew chief.

Hendrick was using Slack, but will switch because Teams works more smoothly with the firm’s existing Microsoft software and has better security, Cochran said.

Redmond, Washington-based Microsoft considered acquiring Slack, but the discussions never got serious enough to involve Nadella or the company’s board, and it opted instead to build its own similar software, said two people familiar with the matter, who asked not to be named because the process wasn’t public. TechCrunch reported Microsoft’s potential interest in Slack in March.

In a very tongue-in-cheek acknowledgment of the competition, Slack took out a full-page ad in the New York Times Wednesday and posted a copy on its website welcoming Microsoft to the field and noting that “all this is harder than it looks.”

Atlassian president Jay Simons said HipChat has an advantage by focusing purely on communicating, while Microsoft Teams is another feature intended to sell Office 365 subscriptions.

“The success Atlassian has had in focusing on teams has probably been a wake-up call to Microsoft,” he said. “On one level, you welcome the competition but on the other level, Microsoft is always a little scary because it’s a huge company with a lot of customers.”

Bloomberg Beta, the venture capital arm of Bloomberg LP, is an investor in Slack. Bloomberg

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