Slack and Microsoft: The unrequited love affair that is better off dead

News that Microsoft considered acquiring white-hot messaging app Slack raises some questions.

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Martyn Williams

Slack is a company seemingly on a roll. The service, for those who haven't used it, is heralded by many as the way to fix email in all its broken, reply-to-all glory. Listening to the shouts of the Silicon Valley cognoscenti, one would be excused from suspecting that everyone on earth uses Slack but, while Slack has seen some stellar growth, it's not quite hit the mainstream to that extent.

Slack's raison d'etre is to remove much of the need for email. Instead of constant backwards and forwards and cc's that are hardly required, Slack users set up teams, channels and topics and have a constant stream of the most relevant communications for them. That can be by way of direct messages between two parties, conversations between teams or automatic feeds from other sources (RSS notifications, feeds from alternative social networks, etc.).

Slack isn't alone in trying to displace email, or, at least, a large proportion of the email that individuals receive. Microsoft's Skype, Salesforce's Chatter, Microsoft's Yammer, SAP's Jam and a host of other solutions all try and do similarly. Add to that the more consumer-orientated channels that many people use in a work environment, and you have a cacophony from the various channels -- Facebook Messenger, the consumer version of Skype, Twitter, etc.

But, as I said, Slack seems to be the breakout right now. Slack has been pushing a platform story and recently began investing into a developers' fund and launching a new app directory. The business, after only a couple of years in operation, now has 2.3 million active daily users, with 675,000 paid seats. In terms of financial metrics, the company says it's seeing more than $64 million in annual recurring revenue.

And, given that Slack recently announced voice and video services to run on its platform, it is perhaps unsurprising that Microsoft, the company that famously acquired Skype and rolled it into its business suite, was sniffing around Slack for a potential acquisition. Silicon Valley scuttlebutt suggests that an $8 billion price tag was discussed but that Microsoft co-founder Bill Gates, along with CEO Satya Nadella, put the kibosh on the idea, preferring instead to invest in building out Skype's features set. The price tag itself is impressive -- not bad considering the company is contemporaneously fundraising at a valuation roughly half that.

But . . . would a Microsoft acquisition of Slack actually make sense?

Hell no. Microsoft, as mentioned previously, paid over $8 billion for Skype only four and a half years ago. Since then it has slowly gotten around to integrating the voice and video application into its office productivity suite. Skype for Business is now a slightly flaky, but fully integrated tool. Bear in mind that much of what Skype did when Microsoft acquired it was already core functionality for Microsoft's existing product of this type, Lync.

To demonstrate that this was less about functionality than it was about taking out a perceived threat, only a year later, Microsoft followed the Skype deal up by acquiring Yammer, a messaging application that seemed to be setting the world on fire, for over $1 billion. Much of what Yammer offered could have been delivered by (or could have been developed on top of) Microsoft's SharePoint product.

Many suggested that the Yammer acquisition was simply a case of Microsoft removing a possible competitor from the landscape. But if that summation is correct, Microsoft has embarked on an unwinnable game of whack-a-mole. The cost to start one of these companies is pretty low -- over the past few years, we have seen an incredible number of similar services borne.

But the chance of these services actually being viable post their initial early-adopter usage, or being sustainable once a large corporate buys them, are remote. Socialcast, one of the early Yammer-like applications, was famously acquired by VMware in 2011, only to essentially drown in murk as VMware insiders and customers tried to work out what to actually do with it.

Of course, some suggest that acquiring Slack would give Microsoft a healthy injection of creative thinking. That was, after all, partly the reason that Redmond bought email application Acompli and calendar app Sunrise. But there is only so much creativity one company can use, and there would be as many negative impacts of chasing the latest "cool kid" in the messaging space as there would be positive ones.

Apart from the highly questionable approach of trying to take out every possible competitor that surfaces, the jury is out on whether Slack actually makes a difference to the problem it's trying to solve. I have to admit that I use Slack, but I also use Google Hangouts, Skype, Twitter, Facebook Messenger and, of course, email. Slack hasn't removed any of those channels in any way. Indeed, watching the general pattern across the half-dozen organizations that I'm involved with who use Slack, there seems to be a general early flurry of excitement and activity, followed by a typical return to email, the status quo of messaging.

In a recent post, one Slack user details why he was giving up on a failed Slack experiment:

"Hey there, Slack. This won’t be easy, but it’s for the best. As you and I both know, things started out so wonderfully. Me with my exploding inbox, you with your (very sexy) ambition to make email obsolete. Only, I don't know if we're so good for each other, after all. Or, more to the point, I don't know if firing up a relationship with you ever really fixed what was broken in my other one to begin with . . . I've stopped using you entirely over the past couple days, and it's honestly been remarkable to see both how hard it's been to disentangle from you from a social perspective, and how amazingly helpful doing so has been from a productivity one."

My view and one obviously held by the upper echelons of Microsoft is that the decision not to acquire Slack was the right call. Call me a skeptic, but I'm pretty sure we'll be scratching our heads in a decade trying to remember what that Slack thing was all about.

Copyright © 2016 IDG Communications, Inc.

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