Microsoft lays out its strategy for the chat wars with $5 billion Slack

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When Microsoft entered the market for work chat apps, it created ripples across the industry: $5 billion startup Slack took out a full-page ad in the New York Times welcoming its new rival Microsoft Teams to the party.

On Monday, Microsoft offered an update on its progress after six months in the chat wars, with the announcement that there are currently 125,000 organizations - businesses, schools, and other entities - using Microsoft Teams to at least some extent.

What those numbers don't say is how many people are using Microsoft Teams: Microsoft's terminology here means that if two people at an organization use Microsoft Teams, it would still count as one of the 125,000. However, Microsoft Teams is part of the Office 365 productivity suite, and Office 365 has 100 million members. In that light, there's still a ton of room for Microsoft Teams to grow.

"We're heartened by where we think we stand," says Larry Waldman, Principal Product Manager for Microsoft Teams.
Microsoft Teams Microsoft Microsoft Teams

Microsoft also unveiled a new feature for Teams on Monday that Waldman says users have been clamoring for: Guest access, or the ability for a team to invite someone (like a contractor) temporarily, so they can chat. That guest will only be able to interact with the team which invited them, meaning a PR consultant won't see, say, legal documents.

That feature speaks to Microsoft's big focus for Teams going forward, says Waldman. Because Microsoft has so much more experience with larger enterprises, Waldman says that the company is going to keep hammering on features that appeal to those customers - like a guest access system with a focus on security.

Contrast that approach with Slack, which found its success by focusing on smaller teams, eventually ramping up to large mega-customers like IBM. Slack sports the much-loved feature to set up teams on the fly and invite whoever you'd like to chat; it's made Slack itself a kind of social hub , especially among programmers.

slack app Slack Slack, the $5 billion startup at the center of the work chat craze.

Waldman says that Microsoft could eventually go further and enhance Teams' appeal to smaller teams, as Slack has done. But Microsoft chose this strategy for now "just because it seemed like a reasonable place to start." To Waldman's mind, the overall goal is to turn Office 365 into a "universal toolkit" for all businesses.

And speaking of Slack, Microsoft's news comes just a day ahead of Slack Frontiers, the startup's inaugural user conference in San Francisco. It seems that Microsoft is trying to set the tone ahead of Slack's big day. Last week, too, Atlassian announced Stride, a new work chat app that will soon supplant its very popular HipChat.

Get the latest Microsoft stock price here.

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