- Slack and Microsoft Teams both recently announced metrics that hinted how much the coronavirus crisis has bolstered their businesses, as more companies turn to remote work to help stem the spread of COVID-19.
- Analysts say that the increased focus on both apps is going to take their already-contentious rivalrly to the next level.
- Some analysts think Microsoft will be the clear winner here because many companies already have Teams as part of the Office 365 productivity suite, and will simply start using it.
- Other analysts think Slack has an opportunity to show how much more reliable and user-friendly its product is.
- "Even though this is like a surreal nightmare for every human and company going through it, the reality is for Microsoft and Slack, it's a pivotal two to three months as they try to gain share in this remote employee dynamic," Wedbush analyst Dan Ives said.
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The ongoing spread of the novel coronavirus is putting companies all over the world in a tight spot, as they send their employees home to work remotely and mitigate the spread of COVID-19.
That's proven to be a boon for Microsoft Teams, as well as its leading rival Slack - within the last week or so, both companies gave big signs that they're seeing increased usage of their workplace chat apps, as customers have an increased need to help employees work together amid the turmoil.
"Even though this is like a surreal nightmare for every human and company going through it, the reality is for Microsoft and Slack, it's a pivotal two to three months as they try to gain share in this remote employee dynamic," Dan Ives, an analyst at Wedbush, told Business Insider.
Microsoft said it recently added 12 million daily active users for Teams in a single week, bringing the total to 44 million. Meanwhile, Slack said it added 7,000 paid customers since February, representing more wins in under two months than in either of its previous two quarters.
Analysts say that the new metrics shine a spotlight both on their increased prominence under the circumstances, but also show that the two companies are taking their already-contentious rivalrly - Ives calls it an "Old Western standoff" - to the next level. At the same time, some analysts experts think the situation illustrates shows how much of a lead Microsoft has already over Slack.
"Teams and Slack are in a fierce battle for market share...this trend is accelerating and is probably going to continue to accelerate over the coming months as more employees around the world are working remote," Ives said.
Slack's growing momentum
Earlier in March, Slack executives said at the time of its quarterly earnings that the company was seeing a "significant spike" in new users, mainly for its free product. At the same time, Slack warned Wall Street analysts that it was too soon to tell if that would translate to a lasting impact for the company.
Still, Slack's growing momentum with paying customers shows that the company could be one of the biggest beneficiaries from the remote work boom, said Rishi Jaluria, an analyst at D.A. Davidson.
As more regions follow the San Francisco Bay Area into setting shelter in place orders that require people to stay home as much as possible, the need for tools like Slack will only grow, Jaluria said. And with no clear idea of when this situation will let up and the working world can go back to normal, the spotlight will remain on Slack.
"The more this happens and the more companies realize, shoot this isn't something that is ending soon and it will all be back to normal, the more its going to drive the adoption for tools like this," Jaluria said.
Microsoft's advantage
Some analysts aren't that impressed by Slack's numbers, however.
Dan Newman, an analyst at Futurum Research, said that Slack's new numbers pale in comparison to the booms experienced by Microsoft Teams, red-hot video chat app Zoom, and even Cisco WebEx under the same circumstances.
He says that Slack's user base tends to skew towards those in the tech and tech-adjacent worlds - two of its biggest customers are Uber and IBM - companies like Microsoft and Cisco can cast a much wider net, given their existing relationships with many companies. In fact, Teams comes bundled with most business versions of Microsoft's wildly popular Office 365 productivity suite, already in use at many of the largest companies in the world.
So in Newman's view, Microsoft's new Teams user numbers are reflective of how many companies already had Teams included in their bundle, but are just now starting to use it.
"This to me is a great example that shows just how much Microsoft Teams is sitting dormant inside of organizations," Newman said. "I think the moment that companies were put in a position where it had to make a decision, this is going to be our collaboration platform, this going to be how we meet when we no longer go to meetings...IT leaders, business leaders, trust Microsoft."
Ives echoed that sentiment and said that this environment lends itself to incumbents with established relationships, especially one with as widespread reach as Microsoft.
An opportunity for Slack to prove itself
Jaluria, of D.A. Davidson, pushes back on the notion that Microsoft Teams is unstoppable.
He says that while Teams is theoretically a newer product, having only launched about 3 years ago, it was built by reusing code from older Microsoft software like Skype. He says that in reality, Slack is more innovative and forward-looking than Teams.
That's why it's so promising to Jaluria that organizations are willing to pay for Slack, even though it has a free version of the product. To him, it shows that users genuinely enjoy the product, which is a big competitive advantage.
He also takes issue with how Microsoft calculates its daily active user numbers, given that it's included with Office 365 - critics like Slack CEO Stewart Butterfield have expressed their skepticism over the company's definition of "active user," since some employees may only open it to see what it is, and then close or delete it forever.
Microsoft recently pushed back on such criticism, and said it only counts intentional actions like sending or replying to a message, joining a meeting, or opening a file in Teams.
Finally, Jaluria spotlights how Teams had a brief outage recently, while the smaller Slack has stayed rock-solid throughout the coronavirus crisis. If Slack can keep that up, it might build itself a reputation of reliability that could win customers over, Jaluria said.
"Potentially that might be showing a little bit of the limitations [of Teams]," Jaluria said. "I think that could actually serve as a beneficiary to Slack over time."
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