Business software pioneer Salesforce.com is buying the Slack work chat service for $ 27.7 billion in a deal aimed at giving the two companies a better view of competition from Microsoft’s long-established powerhouse, Microsoft.
The acquisition announced on Tuesday is by far the largest in Salesforce’s 21-year history. The San Francisco-based company was one of the first to start selling software as a subscription service that can be used on any Internet-connected device, instead of making it more cumbersome to install the programs on individual computers.
Salesforce’s outspoken founder and CEO, Marc Benioff, hailed the concept of “cloud computing” as the wave of the future that initially wore a lot of ridicule.
But software as a service has become an industry standard that has become a goldmine for long-established software vendors. Microsoft for one has developed its own thriving online suite of services, called Office 365, which includes a Teams chat service that includes many features like the six-year application of Slack.
In July, Slack filed a complaint in the European Union accusing Microsoft of illegally inserting Teams into Office 365 in a way that prevents the team from being removed from customers who may prefer Slack.
Microsoft has also posed a threat to Salesforce’s core products, tools that help other companies manage their customer relationships.
“For Benioff, this is about Microsoft,” said Dan Ives, an analyst at Wedbush Securities. “It’s clear that Microsoft is getting further and further away from Salesforce when it comes to cloud wars.”
Building on its success in recent years, Salesforce has diversified into other areas, largely through a series of acquisitions. Last year, the company bought data analytics specialist Tableau Software for $ 15.7 billion. Salesforce was also among the companies bidding to buy LinkedIn in 2016, when Microsoft jumped up.
Slack, on the other hand, has not proven so popular with investors, despite the fact that its service, which was launched publicly in 2014, is increasingly being used by companies and government agencies looking for more vivid alternatives than email. Before news of possible deals with Salesforce came out last week, Slack’s stock was still hovering around its original listing price of $ 26 when the company went public nearly 18 months ago.
“It’s a great strategy for Slack,” said Kate Leggett, an analyst at Forrester Research. – Microsoft Teams will eat Slack’s lunch.
But Leggett says it’s also very good for Salesforce to add a popular collaboration tool to its own software package that focuses on managing customer relationships between businesses and government agencies. He said the need for customer relationship agents and other Salesforce users to get around the topic and collaborate remotely has only intensified with the coronavirus epidemic that sent many office workers home and seized many with new online tools.
“I think the pandemic played a huge role,” in preparing the convention, Ives said. “Zooms, Slacks, Microsoft Teams will be a new part of the workforce.”