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How Microsoft Teams is taking on the hottest workplace messaging app, Slack

Daniel Howley
Technology Editor

Microsoft's (MSFT) productivity line has always been known for Office, the collection of programs you've used, or fumbled with, since junior high. But the future of the company's all-important suite of workplace software will run through its Teams apps.

Teams is Microsoft's enterprise chat app that lets you collaborate with your colleagues via text, voice, and video, and, perhaps most importantly, waste time sending .Gifs and links to "Florida Man" articles.

The company is putting a great deal of effort into making Teams the centerpiece around which its Office 365 enterprise productivity software revolves. But it's also up against one of the hottest tech companies in Silicon Valley: Slack.

Going all in on Teams

Microsoft's Teams is just two years old, but it's already catching up to Slack, which launched in 2015, in terms of the number of companies that use the service. Raanah Amjadi, senior product marketer for Teams, says the chat platform is currently used by 500,000 organizations, including 91 Fortune 100 companies. And 150 of those companies have 10,000 or more employees.

Slack, which debuted in 2015, and is preparing for its upcoming IPO, announced that it has 600,000 customer companies via its S1 filing. The company is valued at as much as $17 billion based on private share sales ahead of its IPO. In its last round of fundraising in August 2018, Slack's value was pegged at $7 billion.

The company's following among millennial users and startups is a major reason for its growth. It's seen as the cool, fun messaging app that every worker wanted thanks to its ability to use .Gifs and custom emojis. Of course, it's also an impressive workplace communication tool that lets workers chat with individuals and groups.

To counter Slack's slick, millennial-centric branding, Microsoft is putting all of its weight behind Teams. That includes deep integration with its Office suite, as well as third-party apps ranging from Adobe (ADBE) Sign to Zoom (ZM) and dozens of others.

Microsoft is positioning Teams as the future of its Office suite, and a Slack killer. (Image: Microsoft)

But it's Microsoft's Office capabilities that set it apart from Slack. While you can do things like preview documents in Slack, you still need to open a secondary app to edit them. So if your coworker sends you a preview of a document in Google Docs, you'd still need to open the Google (GOOGGOOGL) Docs app to edit the document.

With Teams, you can create, open, and edit Office files from within the Teams app itself. What's more, you can access video chat features, Outlook, and a host of other options from within the app.

Team's growth

During a briefing at Microsoft's headquarters on May 1, representatives for the company showed me a number of upcoming features for Teams including live captioning and subtitles, a slick whiteboard offering, 9-person video chat (kind of like a "Brady Bunch"-style chat) and more.

The whiteboard feature in particular is interesting, as it lets people on video calls see a virtual version of a white board in a meeting room, as your in-person colleagues write on it. It's a nifty trick that sees a camera focus on the whiteboard and resize so that it fits on your screen. Software blocks out people, while highlighting anything on the board.

The live captioning and subtitles feature will prove helpful for individuals with hearing difficulties, while the 9-person video chat feature should let you coordinate with colleagues from across the world with ease. But it also means that you won't be able to doze off while on a video call since everyone will see you now.

A large part of Microsoft's Teams push ties back to what the company calls the Microsoft Graph. The Graph is essentially a point at which all of Microsoft's services interconnect, allowing users to bring their information from one app to the next. If, for instance, you open a document in Excel, and then jump to Teams, that same Excel document will be available as your most recently opened document.

Headwinds for Teams

Microsoft's Teams is built into Office 365, which means it has a built-in user base. But there's more competition than Slack in the collaboration software market.

"There are also other options, like Workplace by Facebook (FB), Salesforce bought Quip and is building that out, and you've got Dropbox (DBX) with Paper, so there is an embarrassment of riches in the market for collaboration," explained Gartner analyst Mike Gotta.

According to Gotta, Slack is seeing a lot of success in areas like DevOps and ChatOps, and it does very well with integration with Workday (WDAY), SAP (SAP), Oracle (ORCL) and Salesforce (CRM), areas where Microsoft historically put in as much of an effort. And while Microsoft's Office integration is strong, Slack still works with more apps.

What's more, Gotta says, the collaboration isn't a winner-take-all marketplace.

"There is an embarrassment of riches in the market for collaboration," he said. "It's a fragmented market, and people are making decisions based on use cases, and that's leading to a proliferation of multiple tools in the same organization, and that's the challenge… because a single vendor can't solve all of my problems."

For Microsoft, Teams is the future, but it will have to pull out all the stops to compete in this growing market.

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Email Daniel Howley at dhowley@oath.com; follow him on Twitter at@DanielHowley. Follow Yahoo Finance on Facebook, Twitter, Instagram, andLinkedIn.finance.yahoo.com/