Messaging war hots up as Slack snaps up HipChat

Last week, less than a year after Atlassian launched its workplace chat app Stride, came the surprise announcement they’re pulling the plug in an agreement with competitor Slack. This marks the latest salvo in the battle for the increasingly crowded enterprise chat market.

What’s the deal?

In a blog post Atlassian announced they’re exiting the communications market and entering into a “strategic partnership” with Slack. They’ll discontinue Stride and its predecessor HipChat by February 15 next year.

The partnership deal sees Atlassian transferring the intellectual property for both products to Slack, to smooth the migration path for Atlassian customers. They’ve also made an equity investment in Slack which the company called “small but strategically important”.

The winners

HipChat has been read the last rites, while Stride barely got off the ground. The deal gives Slack more customers and market share, and allows Atlassian to exit an underperforming part of its business in order to focus its more successful project and product management proposition.

Taking out a rival boosts Slack at a critical time, just weeks after Microsoft launched a free version of Teams aimed at those who aren’t using Office 365.

The losers

This leaves HipChat and Stride customers with limited options. They’ve had since 2014 to choose to move to Slack – in many ways a superior product – but for their own reasons have opted not to.

Those who’ve stuck with with HipChat or opted into Stride generally do so for two reasons – they’re heavy users of Jira or Confluence, and value the high level of integration between Atlassian products, or they need an on-premise solution.

Disappointed Stride user Craig Le Grice, CEO of travel startup Upgrade Pack, tweeted: “Very frustrating when you’ve just built an ecosystem. Also – what about Trello…? Still the semi-estranged step-sister of the family. I should’ve just gone with Slack in the first place… We gave Atlassian the chance and took it on its word that it’d improve HipChat with Stride. Now we’ve a migration to Slack to manage.”

The sale leaves those looking for on-premise solutions with few options. Atlassian’s migration hub explains how users can export their data to Slack, but corporate customers will need to jump through internal compliance hoops before they are able to do this. As a concession, Atlassian announced customers with HipChat installed on their own servers will be able to use it for an extra few months or as long as two years, depending on the version. The technology migration path may be smooth, but the policy and process one is likely to be less so for many.

But at the same time, it signals great integration between communication and collaboration tools. Since buying Trello last year, Atlassian have added a host of new features and integrations, complementing the existing ones between Slack and Trello. We use Trello and Slack to manage Intranetizen, with neat integrations between the two. The strategic investment suggests both firms will strengthen these further. In our view this has huge potential to make collaboration a truly email-free process, with real-time planning and integrated chat, supporting firms working in open and agile ways.

What’s next?

This latest consolidation highlights the increasingly maturity of the enterprise communication and collaboration market.

This year’s Internet Trends Report from Kleiner Perkins Caufield & Byers partner Mary Meeker, identified enterprise messaging as the new standard in organising information and teams, and providing the right context and history to improve productivity and collaboration.

It also highlighted rapidly-evolving user expectations of enterprise software. Pioneers like Dropbox and Slack have bought consumer-grade experiences into the enterprise, while the arrival of social behemoth Facebook’s Workplace product has further raised the bar on user experience and usability.

Employees now expect their work apps to be every bit as good as those they use at home. Vendors are upping their game – or where they can’t compete, exiting the market. The challenge remains for those managing digital workplaces to respond to changing employee demand and deliver coherent, consistent and delightful tools.