Slack Deepens Its Partnership with AWS

Has Amazon Chime found its golden ticket to video collaboration success?

Last week, Slack announced that it has signed a deal with Amazon Web Services (AWS) to embed the Amazon Chime voice and video meetings capability into its channel-based messaging application, using the Amazon Chime software development kit (SDK). The move will make Chime functionality available for free for all Slack customers who want to use it — both free and paying customers. Part of a broader multiyear strategic agreement between the two companies, the announcement also sees AWS agreeing to use Slack for its internal teams and promises deeper integrations between their portfolios.

The news starts a new chapter in the hugely competitive market for online meetings and is a big shot in the arm for Chime, which despite having launched over three years ago, has yet to gain significant profile against the big players.

Above all, it’s a timely reminder that AWS is stepping up to the mark in workplace applications during the Covid-19 crisis, an area of its portfolio that has taken a back seat to its infrastructure business until now.

A Perfect Solution for Slack

Launched in December 2019, the Chime SDK enables customers to effectively white-label voice and video meetings technology, embedding it natively into their applications.

For Slack, this is an ideal solution to an increasingly difficult problem. The company has offered basic voice and video features in its application for several years, based on technology from its acquisition of Screenhero in 2015. However, these capabilities are extremely limited and are typically only useful to the smallest of customers. In a market where Slack is competing fiercely with Microsoft Teams, it needed a better option for customers looking for an all-in-one solution to team collaboration and communication. Add to that the surge in demand for video communication led by the pandemic and the need for remote meetings, and Slack’s native meetings feature fell wide off the mark.

Slack already had an app for Chime, as it does for Zoom, Microsoft Teams and Webex. But rather than just enabling Slack customers who also use Chime to integrate them together, this new partnership will surface Chime’s video meetings functionality as if it were a native feature in Slack. In effect, this immediately brings Slack into the video communication space.

Slack gets all the benefit — giving it an all-in-one solution similar to Microsoft Teams and Webex — with little risk involved. AWS’ consumption-based pricing model for Chime and the SDK means that the tool is available if customers want to use it, but there’s no major cost to Slack if they don’t.

With the Chime SDK, Slack will be able to determine where meetings are hosted across 14 regions. This allows the company to deliver 1 millisecond latency and the scalability that a global video service needs, and crucially meets the international data residency and security needs of customers.

Chime’s capabilities are expected to roll out to Slack customers in the next few months. We expect Slack to place particular emphasis on a slick user interface for Chime in its own product, something that has arguably been less of a priority in AWS’ Chime application. Slack will continue to support its existing integrations with Chime, Zoom, Microsoft Teams and Webex, providing these new features as an alternative option for customers.

A Renewed Focus for Amazon Chime

Like many of its rivals in the video meetings space, AWS has seen significant growth in the use and number of new customers for Chime as a result of Covid-19 and the shift to remote working (although it doesn’t share usage numbers for Chime).

However, the new SDK is fuelling the biggest opportunities and is arguably AWS’ greatest source of differentiation in the market. As businesses look for ways to deliver in-built video calling as part of their online experience or app, wishing to maintain full control of the user experience rather than routing users out to a second meetings app, Chime is starting to position itself effectively in business workflow and industry settings such as healthcare and telemedicine, retail, education and financial services. AWS partner bSmart Labs, for example, is using Chime to provide virtual classroom solutions in Italy. EASE and CareMonitor are both using the Chime SDK to facilitate healthcare consultations, and Mindbody has extended its scheduling app to deliver online virtual yoga classes.

This demand, combined with the broader effects of the pandemic, has also prompted several enhancements to Chime, including an increase in the number of participants supported in a meeting from 100 to 250, new security and meeting controls and hardware-accelerated video encoding and decoding. The Chime SDK currently only offers the meetings feature of the Chime application, not the chat function. However, given the success of the SDK to date, it seems likely that AWS will take a similar approach for chat as well.

AWS Raises Its Game in Enterprise Apps

Microsoft and Google get much of the attention from the shift to remote work, but the crisis has also spurred adoption of several products in AWS’ wider applications portfolio. Alongside Chime, the company’s desktop virtualization platform, Amazon WorkSpaces, and its cloud contact centre solution, Amazon Connect, have both performed well.

But we’ve long argued that these areas in AWS’ business seem to be treated as second-class citizens to its infrastructure-as-a-service business, with the company mainly investing in areas lower down the cloud stack over the past few years.

This deal shows that AWS is quietly gaining capabilities that can rival those of its competitors, enabling it to be more assertive and differentiated in higher-margin business applications. We expect the company to make a stronger push in this direction in the coming years. By raising its game in this area, AWS becomes more relevant to customers that aren’t only focussed on IT and developer transformation (the target of much of its cloud business today), but also on workplace transformation, which is becoming an increasingly vital investment priority for businesses during the crisis and beyond. The growing intersection of Slack, Chime and, in future, Amazon Connect and AWS’ artificial intelligence solutions in Lex, Polly and Translate, for example, would form a powerful offering in the post-pandemic customer service area.

A New David and Goliath Chapter in the Video Collaboration Wars

The Chime SDK, and its potentially powerful pairing with Slack, puts AWS in a much stronger position as it faces off against Zoom, Microsoft, Google, Cisco, Facebook and others in this hotly contested technology area (see Facebook Workplace Enters Race for Video Meetings).

On one hand, despite being backed by the might of AWS’ cloud infrastructure, Chime remains a relatively unknown and unproven video meetings solution; a David to the Goliath of Microsoft or Zoom, for example. Slack too has almost no track record in the video meetings arena, although it’s clearly a leader in team collaboration. It’s still unclear whether customers will embrace its new video capabilities, rather than sticking with their existing solution.

On the other hand, AWS and Slack are providers that resonate with developers looking for the ability to build customized solutions, and the Chime SDK plays squarely into that in a way that none of its rivals in the video collaboration area currently do. The integration of the AWS Chatbot service with Slack for DevOps teams as part of the announcement is an example of this focus.

Video meetings are the premium currency of remote work in light of the pandemic, and many organizations will be looking for a way to build the capability into more business workflows and customer-facing applications. We believe this has the potential to be a major growth opportunity for the space, and AWS is well placed to benefit from an early lead here.