Microsoft Buys Yammer- A Two Minute Analysis

So Microsoft has confirmed the rumored acquisition of Yammer for $1.2B. Here’s my thoughts;

  • Potentially this is a great opportunity for MSFT to create a fabric that spans their different enterprise products (Dynamics, Office, SharePoint) that’s a big big opportunity but I believe technology and platform hurdles will push that possibility well into the future
  • Microsoft gets to look “cool” and to at least jump on the Salesforce “social enterprise” bandwagon. That’s more of a validation for Salesforce than it is an opportunity for Microsoft – unless some serious message manipulation occurs and Ballmer starts evangelizing the social enterprise – that’s possible but unlikely
  • Yammer has big user numbers, but small (I’m suspecting) paid user numbers. Alongside that there is an element of shelf ware from paid users. Traditionally legacy vendors get a little despondent when they realize their shiny new thing isn’t going to print them money – I’m hoping the Microsoft is realistic about this deal in terms of its short and mid term revenue potential
  • Is the price too high? As a standalone deal yes, but as a true social fabric play no. However see above re the chances of Microsoft actually pulling that off
  • Existing customers (at least some of them) will be royally pissed by what they see as the potential end of a lightweight and useful tool. I’m not expecting any mass migration but I suspect that other social startups 9and even Salesforce’s Chatter) will see some customers moving over from yammer
  • Generally the deal validates the social enterprise space – which is good for all vendors
  • Cloud vendors without a compelling social story are going to be scrambling to find one – in particular NetSuite that is currently talking up Yammer as their own social component

More to come – watch this space…

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