Work messaging wars: Slack acquires rivals, wins the battle
What's the story
In a surprise announcement, work messaging platform Slack has announced that it has acquired rival HipChat from enterprise software giant Atlassian.
Interestingly, last year, Atlassian had launched a new office messaging app called Stride to compete with Slack, but has now announced that it is pulling the plug on Stride too, and exiting the communications business altogether.
Here's more on the surprising deal.
Details
The finer details of the Slack-Atlassian deal
In a clarification, Atlassian explained that Slack is buying the intellectual property behind HipChat and Stride, and that the two companies i.e. Slack and Atlassian, will work together on future integrations.
Additionally, Slack will pay an undisclosed amount to Atlassian over the next three years to migrate HipChat and Stride's user-bases to its own platform.
Meanwhile, Atlassian will acquire a small stake in Slack.
Twitter Post
What the Slack boss had to say about the deal
… • Atlassian is making a small but symbolically important investment in Slack • We’re committing teams on both sides to create deeper and more powerful integrations between Slack and the Atlassian family of products — there’s so much to do here!
— Stewart Butterfield (@stewart) July 26, 2018
Inevitability
Retrospectively, the deal did seem like an inevitability
Retrospectively speaking, the deal did seem like an inevitability.
Since 2014, Slack has been eating into HipChat's market share, with data indicating that much, much higher numbers of professionals prefer Slack to its rival service.
Despite Atlassian's attempts to claw back into the corporate messaging space with Stride, the company and its new application failed to generate the desired traction.
Mutual benefits
Slack gets corporate messaging, Atlassian gets new customers
Despite the deal signalling a defeat for Atlassian, analysts seem to think that both Slack and Atlassian have things to gain from it.
The deal will now see the two companies cross-promote each others' products, and it's expected that Slack's popularity will bring new customers for Atlassian's core software products, which are anyway growing.
Notably, Atlassian's stock saw a 15% jump after the deal.
Quote
Atlassian's decision to bow out might have been wise
"Communications is a very busy space in terms of peers, and this will allow Atlassian to focus on its core products, which are growing," Jonathan Allen Kees, a senior analyst at Summit Insights Group, told WIRED.
Market domination
The deal consolidates Slack's already dominant market position
For Slack, the deal consolidates its position as the dominant tool for workspace communication.
With over 500,000 active organizations using Slack's platform, the company is way ahead of Microsoft and its workspace communication tool, Teams, which boasts 200,000 active organizations.
Coupled with its impending acquisition of users from HipChat and Stride, Slack seems pretty comfortably placed up top.