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Buying Slack could give Amazon another enterprise toehold

Ryan Francis | June 19, 2017
The online retail giant is reportedly eyeing a US$9 billion deal, but officials at both companies remain mum.

Online retail giant Amazon is apparently interested in scooping up collaboration firm Slack Technologies -- a possibility that could give Amazon a more direct entry into the enterprise.

“Bottom line: this could be a good move for Amazon in terms of upping their game in the enterprise collaboration market, but the devil is in the details of staying power and execution versus competitors like Google, Microsoft and Facebook,” said Forrester analyst Art Schoeller.

Bloomberg News reported Thursday that Amazon is considering the move in a deal that could be valued at $9 billion.

A Slack official declined to comment on the report. Amazon did not respond to a request for comment.

Slack has more than 5 million daily users, and has seen widespread adoption since its inception three years ago. More recently, Microsoft was thought to be eyeing the company, but backed away from a deal when it determined the price -- possibly as much as $8 billion -- was too high, Schoeller said.

Microsoft eventually shifted tactics and formed Microsoft Teams, which launched in November 2016.

The Amazon interest in Slack is noteworthy, given that in February it released a video and audio conference service named Amazon Chime. Schoeller also noted that Amazon’s WorkMail offering has not put much of dent in the popularity of Microsoft's well-established Exchange/Outlook combo or Google Gmail.

Acquiring Slack would help boost Amazon’s market position, Schoeller said, but it would need to follow through with more investment after any purchase if it hopes to take on the major collaboration rivals. He also noted there could be spillover effects on Amazon's cloud operations.

“If Amazon continues to add business applications on top of Amazon Web Services, it will give other partners pause because they would now operate on a competitor’s platform,” Schoeller said.

Although Amazon Chime already has a Chat Room capability, Schoeller expects Slack would displace that as instant messaging gives way to similar team messaging apps.

Chime competes with online web conferencing services such as Zoom, Uber Conference and Join.me. Alan Lepofsky, vice president at Constellation Research, noted that besides WorkMail, Amazon also offers Amazon Docs which is a file-sharing service.

“It will be interesting to see if Amazon and Slack make a good combination," Lepofsky said. "Amazon has been trying to improve their reach inside corporate accounts, outside of just developers. They have their Workspaces virtual desktop, WorkMail and WorkDocs, Chime and Do…, but we don’t hear much about corporate customers adopting these tools.

"Perhaps Slack would provide them a foot in the door, kick starting the opportunity for more of their platform," he said.

 

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