Microsoft built a wall around its customers that could stop Slack’s growth in its tracks (WORK, MSFT)
Slack’s growth prospects in a critical market will face an imposing wall erected by Microsoft, according to a report by Wedbush securities.
Microsoft Teams, a competing product to Slack, is available free to business customers of Microsoft Office 365. That will keep many Microsoft enterprise customers from moving to Slack, according to the report.
Large enterprise customers are especially important to Slack’s future revenue potential.
“The Slack solution is impressive and represents a strong growth opportunity, however we believe penetrating this next phase of enterprises will be incrementally more difficult as the Microsoft/Teams value proposition presents a major competitive hurdle going forward in sales cycles,” Wedbush analysts Daniel Ives and Strecker Backe wrote.
Microsoft has claimed it has more daily active users than Slack, at 13 million. While Slack has responded and said it had 12 million and highlighted user engagement figures which it says show how much people like using the app.
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One out of every ten Microsoft enterprise customers might switch to Slack, the upstart office collaboration tool.
And that’s not good news for Slack.
The San Francisco company is valued at roughly $10 billion by public market investors who are betting that Slack’s passionate “cult” user base will help it become a standard workplace tool — as common as email and mobile phones — in the corporate world.
But according to a recent report by Wedbush Securities analysts Dan Ives and Strecker Backe, Slack’s growth prospects might not be as wide open as investors believe. In particular, Ives reckons, Slack is about to crash into a Microsoft wall.
“Only 10% to 15% of the core Microsoft enterprise customer base is potentially ‘in play’ for Slack,” Ives and Backe write in a recent note to investors initiation coverage of Slack with an “Underperform” …read more
Source:: Business Insider