Microsoft has agreed to pay an eyebrow-raising US$1.2 billion in cash for the startup Yammer, presumably in the expectation that it will gain a much needed boost in social media expertise.
In the immediate term, Yammer will remain a standalone service for its 5-million-plus customer base. Microsoft will also pair the application with complementary offerings from Microsoft SharePoint, Office 365, Microsoft Dynamics and Skype.
Yammer will be part of the Microsoft Office division led by Kurt DelBene, but the team will continue to report to current Yammer CEO David Sacks.
Yammer will proceed with its vision for how social networking can change the way companies will work, Sacks said.
Under Microsoft’s roof, it will be able to accelerate that vision, he added.
The big question, of course, is how Microsoft will integrate Yammer in its product platform, which presumably will happen eventually.
Microsoft declined to comment on that issue specifically during the conference call held after the acquisition’s announcement was made, and a spokesperson was not immediately available to provide further details for this story.
One obvious starting point for a Yammer-Microsoft integration would be the Microsoft Dynamics CRM product. Microsoft has been building out its social features, but arguably at a slower pace than the rest of the CRM industry.
Microsoft Dynamics CRM has an Activity Feed that supports status updates and the ability to “like” a post, for example, among other things. However, its functionality doesn’t come close to that of Salesforce.com’s Chatter — a far more advanced enterprise real-time feed.
Yammer may be able to help close that gap.
While Microsoft Dynamics CRM may not stack up very well in a comparison with Salesforce.com, it does compete well against other CRM cloud-based applications — notably Oracle’s.
Indeed, Oracle recently made its own acquisition in the social media space with its purchase of Vitrue.
Paid Too Much, Entered Too Late
The reality is that Salesforce.com has set the benchmark, though, and even if other CRM providers are trailing behind it, Microsoft is lagging too far to catch up, Trip Chowdhry, managing director of equity research at Global Equities Research, told CRM Buyer.
“Microsoft paid too much for Yammer, and it is buying the company far too late,” he said.
“This acquisition does not change anything for Microsoft,” Chowdhry asserted. “Yammer doesn’t have anything that is special or new, which is what Microsoft needs at this point to get ahead.”
The Yammer acquisition finally makes Microsoft a participant in social media, he acknowledged, “but it certainly will never make it a leader.”