News Stay informed about the latest enterprise technology news and product updates.

Microsoft takes on Slack with new team chat app

Microsoft has unveiled its new team chat app, Microsoft Teams. The app is built into Office 365 and looks to compete with Slack, Cisco Spark and Unify Circuit.

Microsoft is launching a team chat app that will compete with other popular messaging services, such as Slack and Cisco Spark. The app, called Microsoft Teams, is a chat-based workspace that integrates with Office 365 apps and Skype for voice and video calling.

The team chat app will be included as a free add-on in Office 365 enterprise and small business suites. Office apps -- such as Word, Excel, PowerPoint and SharePoint -- are built into Microsoft Teams, which is currently in preview and will be generally available in the first quarter of 2017.

Microsoft needed to launch a team chat app to round out its collaboration portfolio and compete with Slack, Cisco Spark and Unify Circuit, said Frost & Sullivan analyst Rob Arnold.

"From a competition standpoint, the integration with the Office suite is a huge advantage for Microsoft," Arnold said. "They can expose tens of millions of new users to this app, whereas Slack is a third-party, new vendor coming into any deployment."

Cutting into Slack's growth

Slack is popular among small businesses and teams within larger organizations, but it lacks the features and price plan for enterprise-wide deployments. While Slack offers end-to-end encryption, Microsoft Teams, on the other hand, offers additional enterprise security that Slack lacks, such as compliance standards like Health Insurance Portability and Accountability Act and central management as part of Office 365, according to Microsoft.

It's a pretty big threat to Slack.
Irwin Lazaranalyst at Nemertes Research

"It's a pretty big threat to Slack," said Nemertes Research analyst Irwin Lazar.

The popularity of team chat apps is growing exponentially. According to a recent Nemertes study of 40 midsize to large organizations, the use of team chat apps grew from 2% in 2015 to 33% in 2016, with more than half of organizations using Slack.

Lazar said this popularity presents an opportunity for Microsoft to stall Slack's growth. Slack recently reported it has 4 million daily active users and 1.25 million paying users.

But, according to the Nemertes study, nearly 70% of organizations are adopting the cloud for email, calendar and instant messaging, with nearly 90% of those organizations choosing Office 365. An organization using Office 365 that has some teams using Slack could cap Slack deployments in order to standardize on Microsoft Teams, Lazar said.

Questions about Microsoft's collaboration roadmap

The announcement of a team chat app raises questions about Microsoft's collaboration strategy. Microsoft Teams is another addition to Microsoft's messaging portfolio that includes Yammer, which recently integrated with Groups, and Skype.

"There is some functionality overlap between solutions," Arnold said. "There's a lot of alignment and education to be done in terms of how Microsoft sales and partners position the different tools."

Lazar said Microsoft also has a wild card with its acquisition of LinkedIn. Microsoft could potentially integrate LinkedIn with Teams to promote external collaboration across companies.

"There's still a better integration story for Microsoft to tell," he said.

Office 365 integration, encryption are key points

In a pilot program, a handful of Microsoft users took the team chat app for a test drive.

Hendrick Motorsports NASCAR racing team found the team chat app helpful on a loud racetrack, Hendrick IT manager Matthew Cochran said at a Microsoft event this week. The persistent chat-based workspace helped users collaborate, despite racetrack connection issues.

Cochran said the pilot started with the IT department, but then branched out to include teams of engineers.

"We wanted to give our end users the tools and collaboration applications they desire," Cochran said. "But, from an IT perspective, making sure it's integrated with Office 365 and the encryption tools Microsoft puts forth to keep our IP safe."

Next Steps

Why every organization benefits from team chat apps

Team chat apps challenge UC platforms

Team chat apps infiltrate enterprises, with or without IT

Dig Deeper on Collaborative Applications