Slack isn’t worried about Microsoft’s big Teams push

Microsoft revealed last week that it now has more than 13 million people using its Microsoft Teams chat software, a milestone that means the app has overtaken Slack. While the news is significant, active user numbers don’t tell the whole story. Microsoft has been leveraging its popular Office 365 service to bundle Microsoft Teams into its offering to businesses, and the strategy is paying off.

Slack founder and CEO Stewart Butterfield took out a full page ad in the New York Times more than two years ago, welcoming the Microsoft competition and showing that Slack was more than a little nervous about the software giant. Now that Microsoft has caught up and overtaken Slack in terms of raw user numbers, Butterfield says he’s not worried about the rapid growth of Microsoft Teams. “If it’s based on the bigger distribution [Office 365], I don’t think that’s really a threat,” said Butterfield at a business conference on Monday, reports CNBC.

Butterfield dismissed Microsoft’s push and compared it to the company’s failed attempts with Bing to compete with Google’s massive search engine dominance. “Tens of billions of dollars into that [search engine] and I don’t know what their market share is now — 9 percent or something like that,” said Butterfield. In a further comparison, Butterfield noted that Google+ failed despite Google’s attempts to bundle it with all of its services.

Slack has been focused on the human quirks of its software, and ensuring that people love using the app. It was a key part of Slack’s full page ad, warning Microsoft that it would have to show product love and “take a radically different approach to supporting and partnering with customers to help them adjust to new and better ways of working.”

Microsoft hasn’t been as focused on this key part of the overall UX of using Slack vs. Microsoft Teams, and you only have to have used both services to understand the differences. Microsoft Teams ties closely to Office, Skype, and Microsoft’s cloud services, but the company is far behind the third-party integrations that Slack offers and the overall quality and polish. At the same time, Slack feels a little behind on the video and audio calling front, as Microsoft has deeply integrated Skype and it makes holding meetings and recording them a lot easier.

These small differences show that the two chat services are focused on different customers. Microsoft has a vast array of businesses that rely on its software and services, whereas Slack is trying to break into the enterprise and has convinced many smaller businesses and startups to use its software. Slack’s challenge is getting people to pay for its service, and Microsoft’s is getting people to love using its service. Slack now has more than 88,000 paid customers, but it still has more than 500,000 organizations using its free plan.

Microsoft has been aggressively pushing to get businesses to use Teams as part of its Office 365 subscription, and this push was clear to see on Monday. Microsoft is holding its Inspire partner conference in Las Vegas this week, and during the opening keynote it asked thousands of attendees to download the Microsoft Teams mobile app in exchange for a free cup of Starbucks coffee. Microsoft had angered many partners with some licensing changes that it quickly reversed, and the company is offering a free “Microsoft Inspire Cloud Macchiato” Starbucks coffee to say sorry.

Recent reports have also suggested that Microsoft’s sales teams are focusing on getting people to use Teams over the course of the next year. That means we’re going to see even more competition with Slack in the coming months

Microsoft has now reached a point where it has overtaken Slack usage, but that doesn’t necessarily mean people enjoy using Teams or that they use it for hours each day, though. Microsoft made the mistake of ignoring small businesses that weren’t using Office 365 initially with Teams, and only started to offer a free version of the app last year.

The key now for Microsoft Teams is to attract new and old Microsoft customers, instead of just businesses that run on Microsoft Office. Otherwise, Slack will continue to make inroads with an upcoming generation of customers that don’t care about what Microsoft has to offer, and will happily use Google’s G Suite and Slack to build the next generation of digital businesses.