![]() ![]() The direct threat to Slack is more existential: Microsoft’s 2016 announcement of Teams, an enterprise chat and videoconferencing application. ![]() PowerBI), and it relies on Microsoft (along with Amazon and Google) to host its services in the cloud. While Salesforce’s CRM sustains a strong position against Microsoft’s competing offering (Dynamics 365), it faces steep competition from Microsoft in business analytics (Tableau vs. What the companies share, however, is the threat of Microsoft. Slack, on the other hand, achieved great popularity as a communication tool, primarily used within organizations (although it’s recently aimed to be used across organizations as well). It built upon its flagship CRM offering to eventually include a portfolio of related marketing and analytics applications, and a cloud infrastructure services business. Salesforce pioneered the category of software as a service (SaaS) for enterprise customers. On the face of it, the two companies don’t have much in common. What, exactly, did the veteran customer relationship management (CRM) company want from the breakout chat application? Why did Slack, which had seen record growth this year, sell? And just how much value could be created from combining a sales tool with an email substitute? The news left a lot of folks scratching their heads - and Salesforce’s stock dropped more than 8% after news of the deal surfaced. In a year of many changes and shakeups in the technology world, the recent news that Salesforce would acquire Slack for $27.7 billion (!) definitely raised eyebrows. To maintain their edge against bundles, best-of-breed companies need to be able to keep innovating, lock customers in, and integrate well with other best-of-breed applications. Bundles, however, drive value through integration and can take advantage of more efficient go-to-market sales, not to mention by offering customers the convenience of one-stop-shopping for both sales and support. Best-of-breed companies, which do one thing extremely well, have clear priorities and their incremental edge creates value for customers on mission-critical uses and when customers use them intensely - particularly at large organizations. Why sell after a year of explosive growth? The deal, however, epitomizes a question facing so-called best-of-breed companies such as Slack, Zoom, and Dropbox: how secure is their edge over companies such as Microsoft, which offer integrated software bundles that directly compete. The news that the chat app Slack was being sold to veteran customer relationship management company Salesforce for $27.7 billion raised a lot of eyebrows. ![]()
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