Slack vs Microsoft Teams: Comparing the Workstream Collaboration Market to the World Cup

Late last week the story broke that workstream collaboration (WSC) powerhouse Slack reached a deal with Atlassian to acquire the customers and technology surrounding the Atlassian HipChat and Stride products so that they could be folded into the Slack ecosystem. Shortly thereafter Wired Magazine published a story entitled “The Office-Messaging Wars Are Over. Slack Has Won.” As a software company whose business model currently revolves mostly around Microsoft Teams and Skype for Business, you can bet that last weeks’ activity got the team here at Unify Square thinking HARD about the Slack vs Microsoft Teams debate. Coming on the heels of the 2018 World Cup, we’ve decided that Wired’s characterization of the ecosystem activity as a “war” is misplaced. It really is more like a tournament, and not just the month long frenzy of the World Cup itself – but more like the 2 year long process of all the qualifying games leading up to the main event. This workstream collaboration contest is a marathon evolutionary process, and we’ve only just begun.

The Trophy Beckons: Market Opportunity

In the World Cup, the ultimate prize is the golden trophy – but if the WSC Market is its own version of this tournament, then what is the end of the rainbow? It obviously must be revenues and market riches. If we take the Gartner estimates for the WSC market, which until last year, was mainly dominated by stand-alone WC product (e.g. Slack) and which is projected to grow at a CAGR of 96% to about $5B by 2022, that alone is significant. However, if we combine that with what will inevitably be a cannibalization of the core UC market (which is currently ‘only’ growing at a 13% CAGR, but which is projected to grow to $75M by 2022), then the potential is lucrative indeed.

WSC Tournament Delay

Just when the WSC “teams” are getting themselves into playing shape, some industry pundits argue that perhaps the hype doesn’t foot with reality. In fact, Gartner identifies three common obstacles inhibiting initial WSC solution adoption. The first is cost. Because it’s relatively new, there is no official IT budget allocated. Further, there is large concern regarding duplicate spend because the market is still maturing and because the end-user buying behavior often results in multiple WSC platforms running within a single company. The second is clear business benefit. Both IT, as well as business unit leaders are still working to get their heads around the tangible value proposition of this new modality and how WSC separates itself from UC or video or IM. The final obstacle is upper management buy-in. In some instances, while specific teams want to use WSC, central IT is not willing to support the solution for multiple reasons, including concerns related to cost, security and compliance.

Nevertheless, the games must go on and the tournament is busy working its way through the qualifying rounds. The early favorites can be separated into four different camps. There are the stand-alone/special purpose vendors, such as Slack. We’ll call them the “favorites” when it comes to odds of winning the tournament. There are also the office suite bundled vendors, such as Microsoft Teams. These vendors are highly ranked, but it’s been awhile since they won the tournament, so the odds-makers are being purposefully careful with their predictions. There are the cloud UC bundle vendors, such as Cisco Webex Teams. Similar to the suite bundle category, it has also been awhile since this group has scored a major win, so the experts are being equally careful with their predictions. And then finally there is “everyone else.” Because the WSC category is new, we have 20+ different vendors trying to position their existing, or new, products to fit into the category so that they can be eligible for the tournament. This is what makes the qualifying rounds so exciting – it’s still possible for some dark horses to squeeze into the tournament.

Slack as the Germans

Of course, the Germans were the odds-on favorites to win this most recent World Cup coming into the tournament. They had tradition, experience and one of the world’s biggest fan bases on their side. But we all know how that turned out…. Bringing the discussion into the WSC market, as strategic as the aforementioned Atlassian deal was for Slack, the article still referenced disgruntled customers. Further, although the Slack market, installed base, and App Store is currently dominating, and although Slack boasts arguably more passionate users, many believe that a large percentage of the Slack users are non-paying and that once the market matures it will be increasingly harder for them to compete in later stages of the tournament when the pressure is on.

Microsoft Teams as the Brazilians

The Brazilian style of soccer/football has always been known for its creativity, flair and explosiveness. Over the course of the last 15 years, however, all that panache has been lacking from the Brazilian game – they’ve been in a slump, which continued in this most recent World Cup. But there are signs that they’re coming back. Similarly, Microsoft, which was always known for its product and marketing creativity in the late twentieth century seems to be enjoying a resurgence now under Nadella. If we add to this resurgence the fact that Gartner predicts that 80% of the world’s businesses will transition to Office 365 by the end of 2019 and that 55% of the world’s knowledge workers will have access to WSC apps (in bundled office suites) by 2021 (up from 0% in 2016), then it’s easy to see why the odds-makers think the opportunity to unseat Slack is an easy prediction. Added to this bullishness is the recent FREE version of Teams (which should serve to accelerate adoption) as well as the fact that Microsoft Teams also includes the Skype for Business “UC stack” as part of the offering – an expanded set of capabilities entirely absent from the Slack arsenal. However, before we just hand Microsoft the trophy, we still need to see them emerge from qualifying rounds and there are a number of different issues which could still trip them up: First, the timeline and approach upon which existing Skype Online and, even more importantly, Skype for Business on-prem companies will land is still up in the air. Second, in spite of the Office 365 momentum, and heating up the Slack vs Microsoft Teams debate, customers may opt not to put all their eggs in the Microsoft basket, and the Slack end-user passion may persuade IT not to rock the boat.

Cisco Webex Teams as the French

Most pundits don’t currently put Cisco into the initial WSC category discussion as the favorites. They are sort of the “next breath” mention. True, similar to the French, they’ve won it all before….and not that long ago either. But their offering seems to be going through somewhat of a re-invention, and it’s not clear if they’ve really figured out how to put all the pieces together in a manner that can allow them to win it all. And yet, as we saw last month with the French…win it all they did. Obviously the objective of UC bundlers like Cisco is to provide a strong WSC capability to serve as a competitive differentiator now that the UC market is maturing. The question with Cisco is whether they can quickly and successfully translate their former UC on-prem and networking leadership into a compelling WSC offering. By comparing Cisco to the French, Unify Square is NOT trying to imply that we believe that Cisco will ultimately emerge victorious, but don’t count them out.

Everyone Else as the Croatians

And finally, let’s not forget about the ‘rest of the world.’ In this years’ tournament the small nation of Croatia played well above expectations and made it all the way to the finals. They utilized a combination of creativity, moxy, enthusiasm and endurance to surprise (and in some cases frustrate) many of the experts. So, in the WSC market, who will play the role of the Croatians – will it be:

• Google, with Hangouts Chat offering, which can leverage the Google suite bundle power
• Facebook, with its Workplace offering, which can theoretically easily transition users from the consumer offering into the enterprise offering
• Glip, from RingCentral, who can utilize its UCaaS market share leadership to attract users to its WC offering.
• Or perhaps one of the following companies which the industry only has in its peripheral vision, but which may get hot and find some momentum as the market matures: Mattermost, Twist, Flock, Discord, ChatWork, Ryver, or Zoho Cliq

Making it to the Final

While the initial conversation still puts Slack vs Microsoft Teams as a top contender, Slack continues to make bold moves to set itself for a run to the championship match. Learning from the 2018 World Cup however, it truly can be anyone’s game, and only time will tell. According to Gartner, by year-end 2022, 70% of teams will rely on workstream collaboration as the primary means of communicating, coordinating, and sharing information between team members. There still remains a lot of opportunity to compete for customers and market share – the game definitely is not yet over…let’s watch the exciting WSC tournament continue to unfold.

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