Microsoft and Yammer
This morning it was reported that Microsoft may be about to purchase business social network, Yammer - but the question on the tip of everyone’s lips at the moment, is why?
Over the last few months we have seen many a significant consolidation in the social business space, with Salesforce buying both Radian6 and Buddy Media and Oracle purchasing Vitrue. Therefore, it makes sense that Microsoft, who hasn’t produced a successful tool themselves to date is acquiring one of the leading enterprises in social software. So an acquisition like this by Microsoft wouldn’t be the first of its kind.
As a social network, Yammer isn’t competing with the personal social networks such as Facebook. It’s a tool to help businesses operate more efficiently internally and Microsoft has always played in this space, so this seems like a good, natural fit and could be integrated into Microsoft’s suite of products.
Yammer has a business model, all be it a freemium one (it’s free but has a premium version) and has good traction among big brands – 80% of the Fortune500 use it. That said, I haven’t seen any revenue or profit details from Yammer but I would guess that Microsoft can see a positive revenue line to justify a $1bn+ valuation.
As mentioned above, this space is ramping up, fast and the implications of the deal affecting the social business area are already being speculated upon. This is due to the fact, that more businesses are beginning to understand the different facets needed to become a ‘social business’. Having a highly connected and collaborative workforce is central to this.
The high valuation shows that Microsoft are serious about the space. Whether or not this $1bn deal will legitimise the social business sector will remain to be seen. We are still in the early stages of brands adopting the mindset of being truly social and once that develops, the need for the tools will follow shortly after. I would expect to see the social software space continue to grow over the next year.
