The Yammer team will be joining the Microsoft Office Division, led by division President Kurt DelBene, and the team will continue to report to current CEO David Sacks.
“The acquisition of Yammer underscores our commitment to deliver technology that businesses need and people love,” said Steve Ballmer, CEO, Microsoft. “Yammer adds a best-in-class enterprise social networking service to Microsoft’s growing portfolio of complementary cloud services.”
Is Yammer a good buy?
Since the Yammer team will be joining the Microsoft Office Division, it seems like they’re planning on making Microsoft Office socially integrated, or something along those lines. It’s not really clear what Yammer’s role would be in Microsoft, begging the question: is this acquisition a smart move?
Let’s look at what some of the experts have to say about the acquisition.
The good and the bad
Companies are now seeing the value of social networking as a business tool; that’s why companies are shelling out so much cash to acquire social networking sites, i.e. Salesforce bought Buddy Media for $800 million and Oracle bought Virtue for $300 million.
Yammer boasts some 200,000 clients worldwide with three million total users, quite an impressive number, but SiliconANGLE’s Mark “Rizzn” Hopkins brings up an important point: the company has been around for three and a half years and that number is not that impressive, plus the fact that three million is the total number of users, not active users. They have about 10-80,000 unique users per month. Based on the estimated unique users per month, Yammer has an operating cost of $12,500 per Yammer user. Plus, there’s reason to believe that Yammer is not profitable since most of the money they have is from VC investments.
So is Yammer really worth $1.2 billion? Some say it is, as it would bring something new to Microsoft.
“For someone else, that price may be high,” said Ping Li, a partner at Accel Partners. “But Yammer brings a set of capabilities they don’t have. From a product perspective it makes sense.”
Too little, too late?
Some believe that this effort from Microsoft is a bit too late to the social scene, and that buying a company that imitates another won’t lead them to the top.
“Microsoft is too late to the social party,” Trip Chowdhry, managing director at Global Equities Research, said. “You cannot get into a leadership position by imitating the leaders. This is a non-event for Microsoft and for the industry.”
But Microsoft is not new to the social side of the business, since they’re one of the major investors in Facebook, plus they own Skype. So it would be wrong to say that Microsoft is just now recognizing the value of social enterprise, having long invested in this area. What Microsoft seems to be ramping up for, however, is enterprise-level integration.
Regaining the consumer experience
Microsoft’s certainly shifting gears across the board, determining how to best balance the company’s established software business in an industry where rivals are encroaching on their turf through the cloud and owning the stack, from hardware to software and everything in between. It’s quite clear that whoever owns as much of the consumer experience and can offer a fluid, service-driven interface will gain end users, and Microsoft already has an advantage in the enterprise thanks to its OS’s long-standing dominance in the workplace. But IT is changing too, as more mobile devices replace PCs and consumer demand shows its influence in the least expected of places.
Microsoft’s missed plenty of opportunities in the past few years, giving way to Google’s web-based offerings and Apple’s unified approach. But the Redmond-based company isn’t sitting on its laurels anymore. This year alone we’ve seen Microsoft’s revamped efforts to change the user experience full circle, announcing its own hardware with the Surface tablet, a cloud offering through Smart Glass and the promise of a revolutionized Windows 8. If Microsoft can really pull it all together, we’ll see the effects trickle down to the social enterprise, though Yammer may or may not be a determining factor in their overall success.