Slack is partnering with Amazon in a multi-year agreement designed to make its communications app more appealing to enterprises. The deal comes just as Slack faces increased competition from Microsoft Teams, and it will see Slack migrate its voice and video calling features over to Amazon’s Chime platform. Voice and video conferencing is a particular weak point of Slack compared to Microsoft Teams, but this new integration should mean it will be vastly improved in the future.
While Slack has long used Amazon Web Services (AWS) to power parts of its chat app, it’s now committing to using Amazon’s cloud services as its preferred partner for storage, compute, database, security, analytics, machine learning, and future collaboration features. The deal means it’s unlikely we’ll see Slack turn to Microsoft’s Azure cloud services to power parts of its service in the foreseeable future.
Amazon is also planning to roll out Slack to all of its employees as part of the deal in an enterprise-wide agreement. It’s not immediately clear how many of Amazon’s 840,000 employees will be using Slack, though. Up until today, Slack’s biggest customer has been IBM, which is rolling out Slack to its 350,000 employees.
Slack and Amazon are also promising better product integration and interoperability for features like AWS Chatbot, a service that pushes out Slack channel alerts for AWS instances. In the coming months, Slack and AWS will improve its Amazon AppFlow integration to support bi-directional transfer of data between AWS services and Slack channels.
All of these integration points and Slack’s embrace of Amazon are designed to make the chat app far more appealing to enterprise customers. Slack has been steadily growing its enterprise business, despite Microsoft’s big push with Teams recently. It’s a point that CEO Stewart Butterfield has been keen to stress in recent interviews, even if he thinks Microsoft is “unhealthily preoccupied with killing” Slack.
“The future of enterprise software will be driven by the combination of cloud services and workstream collaboration tools,” says Butterfield in a statement today. “Strategically partnering with AWS allows both companies to scale to meet demand and deliver enterprise-grade offerings to our customers.”
It’s a deal that will benefit both Amazon and Slack. Amazon gets an important partner for AWS and its Chime platform, and Slack gets the reliability and security of AWS with a better voice and video calling service underpinning its service.
The partnership also speaks to the core of how Slack has managed to win businesses over. Slack has opted for partnerships and integrations with a variety of rival software and cloud providers, and hasn’t always attempted to build those features into its own app. Slack CEO Stewart Butterfield touched on the value of that integration in a wide-ranging interview on The Vergecast last month.
Slack’s main rival, Microsoft, is also trying to entice developers and improve app support in Microsoft Teams, but the company’s tightest integrations are still the Office suite of Outlook, Word, Excel, PowerPoint, and more. Microsoft has also been bundling Teams as part of its Office 365 subscription, tempting businesses to use the communications software over Slack and other rivals.
Slack’s approach seems to be working, especially for businesses that aren’t as reliant on Microsoft’s productivity apps. Slack reported its earnings today, revealing more than 122,000 paid customers, an increase of 28 percent year over year. Over 750,000 organizations are now using a free or paid subscription plan, up from 660,000 at the end of the last quarter.
Butterfield describes Slack’s recent quarter as “phenomenal,” with 50 percent revenue growth year over year. Slack broke a user record back in March, just as many businesses started to order employees to work from home amid the ongoing coronavirus pandemic. “We believe the long-term impact the three months and counting of working from home will have on the way we work is of generational magnitude,” says Butterfield. “This will continue to catalyze adoption for the new category of channel-based messaging platforms we created and for which we are still the only enterprise-grade offering.”
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