Slack a costly buy for Salesforce: Analysts

New Delhi: The $27.7 billion acquisition of workplace collaboration app Slack by the Cloud software firm Salesforce is an expansive buy and according to analysts, the deal will see no change in the short term for Salesforce and Slack customers.

In one of the biggest deals in its history, Salesforce earlier this month announced to acquire Microsoft Teams rival and enterprise chat platform Slack.

As of October, there were 115 million daily active users of Microsoft Teams while Slack had 12 million users in 2019 (the last that it reported active users).

According to Salesforce, combining Slack with its Customer 360 platform will be transformative for the industry. However, according to Forrester, employees are more engaged with Salesforce applications in the way they work and communicate.

"If Salesforce can't deliver on this, it paid a huge price tag that will result in relatively little impact," said Kate Leggett, Vice President, Principal Analyst at Forrester.

Barron stated that Slack is an expensive buy for Salesforce, and the deal might not work as Slack doesn't yet have sustained profitability, and Microsoft is offering rival software Teams for free through a bundle.

"Citi analyst Walter Pritchard downgrades Salesforce to neutral from buy with a price target of $250 as the multiple paid makes it challenging to see a positive return," reports Seeking Alpha.

While Slack may replace in Salesforce customer accounts, this move will not erode Microsoft Teams penetration - in and outside of Salesforce accounts.

"This acquisition makes sense on paper. Slack hasn't made much noise as it should have during a year when we've seen much more remote work and presumably need more collaboration tools (contrast the buzz around Slack vs the buzz around Zoom)," Forrester elaborated.

And Microsoft has dominated the space in recent years, due to the large Skype For Business installed base that is now moving to Teams and Microsoft's success in bundling Teams with M365.