Facebook Launches Workplace For Enterprise Communication

Facebook Inc (NASDAQ:FB) recently launched its business-centric communication network, Workplace. Known as Facebook at Work initially, it has been in pilot since 2015.

Workplace boasts features common to Facebook like News Feed, Trending, Live, Reactions and Search. It also has certain in-app exclusive features like dashboard analytics and a single sign in access. Facebook also announced “Multi-Company Groups”, which will allow employees of various organizations to work together.

Will Facebook Succeed with Workplace?

With Workplace, the social media giant is trying to break into the lucrative enterprise software market. Per a Jun 2016 Gartner report, global spending for enterprise software will grow 7% year over year to $367.5 billion in 2016. This is a lucrative opportunity for Facebook, given the higher margins involved. Analysts observe that Facebook at Work’s familiarity with the social media platform could benefit it greatly. The look and feel of the app is almost similar to Facebook itself with a Work Feed, status updates, and single and group message platforms among other features. Plus, there are no advertisements on the platform and there will be more privacy as the company will not track users or hold their data.

However, the familiarity may also be its key challenge. In terms of users, most people may have a personal Facebook account but a workplace account is a very different thing. As Tech Crunch puts it, “Facebook will just have to conquer the stigma that it’s for fooling around, not for getting work done.”

Also, the enterprise software space is highly competitive with the presence of other business centric communication products like Slack, Convo, Microsoft’s (NASDAQ:MSFT) Yammer and Salesforce’s (NYSE:CRM) Chatter.

Consequently, Facebook has adopted a competitive tier pricing system. After the 3-month trial period, Facebook will be charging $3 for up to 1000 monthly active users. For above 1K to 10K MAUs, the fee will be $2 per user and for above 10K MAUs, Facebook will charge $1 per user. Notably, Workplace is free for all educational and nonprofit organizations.

In contrast, the most popular platform, Slack’s basic version is free but it charges a whopping $6.67 per active user per month for the Standard version. The rates are as high as $12.50 for the Plus version. Even Yammer’s basic version is free but the prices go up for its higher versions.

However, Facebook doesn’t provide all the features like Slack and Yammer but has reportedly collaborated with Google (NASDAQ:GOOGL) and Microsoft to integrate their products with Workplace. Also, Facebook has collaborated with a group of technology and professional service organizations to accelerate the adoption of Workplace.

In a blog post Facebook mentioned, “To help more companies get started with Workplace, we are announcing the Workplace Partner Program, a group of technology and professional service organizations such as Deloitte who will work with us to bring Workplace to even more businesses across the globe. This means that companies will have more ways to access Workplace — by working with our teams directly or via our approved and trained partners.”

Facebook further added that that over 1K firms across the globe now use Workplace including the likes of Starbucks (NASDAQ:SBUX), Booking.com and Danone, along with regional leaders such as YES Bank (India) and the Government Technology Agency of Singapore (Singapore).

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Written By: Zacks Investment Research