End of an era: Atlassian bows to Slack, divests chat platform IP

Dive Brief:

The communication platform market just lost one of its leading competitors. Atlassian announced Slack has acquired the intellectual property (IP) of Stride and HipChat and the services will be discontinued, said Mike Cannon-Brookes, co-founder and CEO of Atlassian, during the company's Q4 2018 earnings call Thursday. The companies did not disclose terms of the deal.
The company is partnering with Slack to migrate existing customers away from Stride and HipChat and close down its HipChat servers and data center. Users still have the opportunity to choose to migrate, said Slack CEO Stewart Butterfield, in a Tweet Thursday.
"Atlassian is making a small but symbolically important investment in Slack," said Butterfield. The companies will continue to have a marketplace with other offerings and APIs available for integrations for customers that use Slack for communication and the suite of Atlassian products throughout the integrations, said Cannon-Brookes, during the call.

Dive Insight:

Atlassian recognized that while the communication platform market is growing, the company's investments in it are "unlikely to generate returns that are comparable to those of [its] other products and opportunities," said Cannon-Brookes.

Slack is trying to position itself as the most attractive platform and one of preference to those looking for a corporate chat tool. Microsoft came into the market with Teams in 2016 and dominated largely unmatched, even with competition from Workplace by Facebook.

Teams is just one part of Microsoft's suite of enterprise software and this is Slack's entire territory.

Slack, while it was a pioneer of the communication platform market, was often cast aside by larger enterprises. Smaller businesses embraced Slack's platform, but with its new partnership with Atlassian, Slack has a chance at capturing a whole new customer base.

Even with the new partnership, both companies have to compete with Microsoft's all-in-one style of products. Companies that are comfortable on Microsoft 365 or Office 365 are likely to stick with the Microsoft suite for efficiency.

For example, earlier this month Microsoft announced a free version of Teams, ideal for freelancers and small businesses, hitting one of Slack's selling point.