Morning Markets: Here’s the latest from our running look at the Slack-Microsoft scuffle over a key piece of the productivity puzzle.
Crunchbase News focuses on startups, and we nearly never write about product. Let’s break both rules this morning.
Microsoft announced a number of updates to its Teams product today. Teams is Microsoft’s Slack cognate, a piece of its larger Office 365 puzzle. In Microsoft’s view, companies need two ways to communicate: Teams for small-group chat, and Yammer for company-wide comms.
Maybe! But what matters is that after whatever went down with that Microsoft-Slack deal, Slack is heading towards an IPO after becoming one of Silicon Valley most remarkable companies (its stand-out metrics: brand, and revenue growth). And Microsoft is building out Teams as quickly as it can to fend off a nimble competitor that is threatening the flank of one of its key cash cows, its productivity stack.
So, what did Microsoft announce today? I spent some time on the phone with Microsoft corporate vice president (CVP) 1 Emma Williams, who has been at Microsoft for a decade and a half, to discuss the changes.
Microsoft wants to make Teams a product that works for mobile, “frontline” workers. Think airline staff, retail workers, and the like. The new stuff that Microsoft built for Teams is designed to meet the needs of those workers. Features like shift support, and audio messaging.
What matters in the news isn’t the individual features (more on that here), but the idea that Microsoft wants to target a far-larger set of employees than just desk-oriented staff to use Teams is interesting. The idea, if successful, increases the potential pool of paying seats than I would have guessed that Teams, or Slack, could go after.
Perhaps the total addressable market (TAM) for Slack-like apps is larger than we thought. That could work out well for both Slack and Teams (perhaps there is enough market room for both to succeed), but also seems to put Microsoft ahead in the market that exists outside the tech sector, where it has a larger brand. If so, Microsoft could steal a march on a large slice of TAM.
The moves from Microsoft come on the heels of some research the firm was touted that claimed that Teams was besting Slack in usage. Not in San Francisco, at least that I have seen. But I live in two bubbles (tech’s, and an Ivy town), so I can’t really comment.
For Slack, which hired Goldman Sachs for a 2019 IPO, increased competition could mean slower growth, anathema for a company as well-funded as itself, and with as large a valuation to live up to as Stewart Butterfield’s staff and investors expect.
It’s going to be a super exciting year.
At the company, CVPs are one step down from executive vice president (EVP), the cohort that answers to the CEO if I correctly recall my Microsoft lore.↩
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