Let’s breakdown the statistics and reasons why
Don’t get me wrong.
I am a major fan of Slack since it was released back in 2014. Having used the application extensively, the UI and UX make the product seamless, especially the little to no onboarding needed to set up the tool.
Slack makes it known that it has many more integrations than Microsoft Teams, with over 800 third-party connections while Microsoft Teams has less than 200. This is especially useful for techies looking for specific integrations that Slack might have that Teams doesn’t.
Butterfield has said himself that he doesn’t see Teams as a competitor.
“What we’ve seen over the past couple of months is that Teams is not a competitor to Slack,” said Butterfield in an interview with CNBC
That being said, it is quite evident that although this statement was made, looking at the data and market share, Slack is, for the most part, competing with Teams.
So how is Slack Losing out to Teams?
I never believe that Slack will ultimately fall to Teams. It has become a huge software player within the collaboration space and ultimately re-invented a part of it.
But there is no doubt that Teams has managed to grow and surpass Slack in a limited amount of time, even with Slack’s incredible initial growth ( as seen in the comparison above).
As of April 29, Microsoft’s Teams group-chat platform is now at 75 million daily active users, up from 44 million in mid-March.
Slack has avoided the whole DAU (Daily Active Users) talk and not updated its numbers since October last year (which sat around 12 million). Instead, Slack has focused on statistics around user engagement as well as ‘simultaneously connected users’ (their statistic on users who are active on Slack at one time).
Let’s take a look beyond the DAU statistic
Although DAU is a good general statistic to look at, let’s take a look at some other data points from the recent year.
Research firm SimilarWeb noted two interesting areas that Teams is demonstrating stronger growth as well as interest in.
Teams Has Higher Web Traffic
Although not the best statistic to look at, it’s interesting to note the massive jump since early this year.
Slack: 95 million monthly visits
Mircosoft Teams: 39.2 million monthly visits
Slack: 134 million monthly visits
Microsoft Teams: 187 million monthly visits
The main reason for this growth is the millions currently on versions on Office 365 that have not activated their Team’s license. Since COVID-19 hit, many have gone and done this.
“The sudden rise of Microsoft Teams is likely influenced by the fact that it’s available at no additional cost to Office 365 users,” said Peter Tsai, senior technology analyst at Spiceworks, in a statement accompanying the survey results Monday.
This was one of the criticism’s that Slack pinned Microsoft on, having a low converting product.
Even if ultimately Slack takes over on traffic again, Microsoft will have already reached their goal of converting more of its userbase into Team users.
Teams has Higher App Downloads
January — March:
Microsoft Teams: 2 Million App Downloads
Slack: 1.02 Million App Downloads
With almost more than 1 Million App downloads ontop of Slack, we see a much larger userbase for Microsoft Teams as well.
Coupled with the outstanding recent performance of Microsoft’s earnings around its Office 365 numbers, signifies a larger push for the product and Microsoft overall.
So why is Slack losing out to Teams?
There are several reasons why Teams is beating out Slack.
Office 365 factor
One of the primary reasons why Microsoft Teams is beating Slack is the bundled versions of Office 365.
Teams doesn’t come as a standalone product but rather an additional application (you can kind of view it as free) in certain levels of Office 365 suites.
On the cheapest tier, Office 365 goes for $5 a month versus Slack’s $6.67 a month. On the next tier, both Office 365 and Mircosoft Teams are $12.50 a month before it heads into the enterprise tiers.
But there’s one significant difference you may notice already.
Slack offers a standalone product while Teams comes bundled with many essential applications, most of which are used by many in businesses every day.
This includes tools like Powerpoint, Word, and Excel which are bread and butter to anyone’s normal workday.
Even looking at the cheapest tier, Microsoft is offering much more value for cheaper.
This brings us to the next point.
Microsoft pockets are deep, and sales can bundle
One of the reasons Teams managed to gather large market share quickly and efficiently is by offering for free as an additional application on top of Office 365 suites.
This meant there was no reason for many companies to switch over to Slack, potentially paying the same price for a collaboration tool that was already provided.
Even if Microsoft is losing money with its bundling approach, they have the pockets to outlast Slack, who has been struggling to reach profitability for years.
This also gives the sales team an easier way into different accounts, especially by offering multiple products rather than a stand-alone like Slack.
Teams created a freemium tier
One of the advantages Slack had for a while over Teams was its freemium tier. Slack’s conversion rates from free to paid were so good (around 30%) that giving the product away on a freemium was a viable strategy for growth.
When Teams finally offered a freemium product in 2018, this allowed Microsoft to compete with Slack on all tiers, including free ones.
This is most likely a more aggressive growth strategy to go against Slack, which has been working as seen in recent statistics.
Even with Slack’s incredible growth, Teams has shown that an aggressive growth strategy, including bundling the application within its Office 365 suite of products.
COVID-19 has given Microsoft an extra advantage to edge past Slack in a battle to dominate the collaboration space.
Slack has since being bought by Salesforce and has in a way admitted defeat in the war in collaboration software.