Two weeks ago, we predicted Slack would do something special to counter Microsoft’s announcement that it was releasing a freemium version of its collaboration application Teams. A freemium Teams, after all, was a direct threat to Slack, whose appeal to date was largely due to the fact that it offers robust functionality in its free version.
Yesterday, Slack did that “something special.” It announced it is buying Sydney-based Atlassian’s corporate chat software for an undisclosed sum that will be paid over the next three years. The result is Slack will get HipChat and Stride, giving Slack more customers that pay a monthly service fee. For its part, Atlassian gets a graceful exit from a market it hoped to break into, but which it never fully succeeded in doing even after the release of Stride last year. In a blog explaining the move, San Francisco-based Slack explained what will now happen with HipChat and Stride:
“As part of this partnership, Atlassian will discontinue Hipchat and Stride, and provide a migration path to Slack for all their customers. We are purchasing the IP for Hipchat Cloud and Stride to better support that path to Slack, while Atlassian is making a small, but symbolically important investment in our business,” the post read. “We’re also committing teams on both sides to build deeper and more powerful integrations between Slack and the Atlassian family of products, which includes adding new functionality to the existing Slack integrations for Jira Server and Cloud, Trello, and Bitbucket, and building out new integrations with Confluence and other products.”
It’s a bold move and one that will definitely give Redmond, Wash.-based Microsoft something to fret about. In a refreshingly honest blog post, Altassian’s vice president of product management, Joff Redfern, simply said that, despite best efforts, Atlassian couldn’t break into the market:
“When we announced Stride in September 2017, we said, ‘It’s time we rethink the way we’re working. We believe that teams can stay connected and keep moving forward.’ We still believe that. We knew we were taking a risk by entering an already competitive real-time team communications market, but we were willing to do the hard work necessary to build a great product. And we believe we were on that path. Stride was a bold project, and we’re very proud of the product we created and the team that created it.”
However, he added, over the past year the market in real-time communications has changed pretty dramatically and it is getting harder to do business.
Stride was released less than a year ago aimed at competing with Slack and Microsoft in chat software. The idea was Atlassian would move its HipChat customers to a new product — Stride — that combined more of the features that Slack and Microsoft had been adding to their chat services. It even offered audio and video conferencing and project-tracking. However, the migration from HipChat to Stride never really took off, so Atlassian decided to move on, but to keep Stride alive. Redfern added:
“We believe the best way forward for our customers and for Atlassian is to enter into strategic partnership with Slack and no longer offer our own real-time communications products.”
Atlassian is not entirely giving up on Stride, though, and will take a small stake in a startup that will be driven by both companies. It will also continue to manage the chat products and customers until the cloud services are shut down in February. Customers with HipChat installed on their own servers will be able to use it for an extra few months or as long as two years, depending on the version.
Will this be enough to compete with Microsoft? It’s far from clear. To date, Microsoft claims 200,000 organizations use Teams, while Slack claims 500,000 active organizations. Microsoft also claims to have 135 million Office 365 users, all of whom are being encouraged to take up Teams.