Microsoft buys Yammer for $1.2 billion

Microsoft buys Yammer for $1.2 billion

Summary: Microsoft is paying $1.2 billion for Yammer and is folding the enterprise social networking vendor into its Office division.

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The rumors were right. Microsoft announced on June 25 it has bought enterprise social networking vendor Yammer for $1.2 billion in cash.

Yammer will join the Microsoft Office Division, led by division President Kurt DelBene, and the team will continue to report to current Yammer CEO David Sacks, according to a Microsoft statement.

I doubt seriously whether Microsoft will be integrating any of Yammer's technology into Office 2013, as the client, server and services that are part of this wave are already quite far along in development. A public beta of Office 2013 is expected by many of us Microsoft watchers in July.

So what will Microsoft be doing with Yammer? Integration into existing Microsoft products isn't being mentioned by anyone from Microsoft today. From Microsoft's June 25 press release about the acquisition:

"Yammer will continue to develop its standalone service and maintain its commitment to simplicity, innovation and cross-platform experiences. Moving forward, Microsoft plans to accelerate Yammer’s adoption alongside complementary offerings from Microsoft SharePoint, Office 365, Microsoft Dynamics and Skype."

So many folks have asked me since the original rumor-go-round began why Microsoft would want Yammer. After all, Microsoft already has several partnership deals in place with Yammer and has its own enterprise social-networking technology built into SharePoint.

Here's the official statement from Microsoft as to why it's ponying up for the company:

"The acquisition of Yammer adds best-in-class enterprise social networking to Microsoft’s growing portfolio of complementary cloud services; world-class talent that knows how to deliver rapid innovation in the cloud; and a unique adoption model that appeals directly to end users."

(In my earlier speculation I wondered aloud whether Microsoft might be buying Yammer for similar reasons it bought Skype: It needed a cooler brand and wanted the cross-platform support. I still stand by those wonderings.)

As I blogged earlier this month, Microsoft was working on its own Yammer competitor, known as OfficeTalk. Last week, the Softies posted a downloadable case study which indicated that OfficeTalk is now nothing more than a Microsoft IT demo project.

When I asked Microsoft officials whether the company had decided against commercializing OfficeTalk after all, I received this response from a spokesperson: "Great ideas areas such as OfficeTalk, are always coming from The Garage.  We have nothing new to share." (The Garage is a Microsoft internal incubator.)

Update: Here are a few additional tidbits from a call Microsoft and Yammer held for analysts and press about today's announcement:

  • Though today's press release didn't mention integration plans, CEO Steve Ballmer and Yammer CEO David Sacks both acknowledged Microsoft plans to integrate Yammer's technology with Office, Office 365, Dynamics (CRM) and Skype. Microsoft will, however, continue to also offer Yammer as a standalone cloud service, too.
  • There are more than 5 million registered corporate Yammer users out there today.
  • Microsoft is claiming it will largely follow the Skype model with Yammer, in terms of leaving the company in its present locale (San Francisco in Yammer's case). But Sacks doesn't run a separate business unit the way Tony Bates does with Skype. Sacks and his team become part of the Office division.

Topics: Microsoft, Banking, Collaboration, Social Enterprise

About

Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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26 comments
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  • Why buy it?

    Read this page: https://www.yammer.com/customers/

    It doesn't matter if Microsoft could have built similar technology (the same could definitely have been said for Skype). There is a cost trying to get corporations to switch to your product, and that takes time.
    Jeff Kibuule
    • Maybe for IP?

      They actually DID build similar tech in the form of Office Talk which according to the documents shared by Microsoft, they actually used Office Talk internally at Microsoft. I would be surprised if we didn't see Office Talk folded into SharePoint 2013.

      That said, the question remains; Outside of IP, why buy Yammer?
      MSFT_Tinkering
      • buying face time (not FaceTime) with customers

        We tried (and abandoned) Microsoft's "chat" with LCS and federation with external providers. It was clunky, incomplete, and far more hassle than just using what already existed in the market with AIM, Skype, et al. and using a multi-login client like Trillian.

        We only used LCS because it was free with other licensing. Can't imagine paying for it separately, or even paying for our limited use of SharePoint. Unfortunately, having the "free" stuff from MS means that we have to evaluate the paid costs of any alternative against "free".

        By buying Yammer, there are a lot of people who are using free or paid services _instead_ of the Microsoft offerings. This is a chance to buy them back. Also a way to keep current customers who might be considering non-MS services...if they buy into Yammer, they won't be on the tally of customers lost.
        alegh
  • The Garage is really

    just a place where Microsoft tries to figure out how to copy other company's ideas.
    GoPower
    • Yeah

      Microsoft's "Where do you want to go today?" should actually be "Who do ya want to copy today?", spoken with a solemn and dark voice. :)
      Mikael_z
      • Ignorance is not a condition which should be revealed,

        so openly, as you have just done in a popular forum, where people will judge your general knowledge about the things you dare to speak about.

        Think, and do some basic research, and you too, can get educated. Ignorance can be overcome when someone decides to get informed. Microsoft spends more money in research than Apple or Google. Research is not the same as "copying" others. Look it up in the dictionary, and even you might agree.

        "Microsoft spends $9 billion annually on its Research division and has 12 office locations located around the world."

        http://www.neowin.net/news/microsoft-research-celebrates-20th-anniversary
        adornoe
    • Ignorance is not a condition which should be revealed,

      so openly, as you have just done in a popular forum, where people will judge your general knowledge about the things you dare to speak about.

      Think, and do some basic research, and you too, can get educated. Ignorance can be overcome when someone decides to get informed. Microsoft spends more money in research than Apple or Google. Research is not the same as "copying" others. Look it up in the dictionary, and even you might agree.

      "Microsoft spends $9 billion annually on its Research division and has 12 office locations located around the world."

      http://www.neowin.net/news/microsoft-research-celebrates-20th-anniversary
      adornoe
  • Focus on Office 365

    Based on yammer's blog post today, it looks as though Office 365 will receive much of the focus early on.

    "Yammer???s expertise in empowering employees, driving voluntary adoption, and delivering rapid innovation in the cloud will not only continue to power our stand-alone service, but also help shape the communication and collaboration experiences in Office 365."
    USArcher
  • Who knows what will become of this

    Microsoft does benefit in one major way: they instantly get all of Yammer's previous customers. Even if they don't do anything different with Yammer, if they can keep the existing customer base happy, that's still money coming in. Of course, they could also leverage it to get the user base to move over to their own platform too.

    I can see a revision of the Outlook Social Connector rolling out eventually....
    Joe_Raby
  • Ugh! Yammer?

    Sorry - after using it for a year, I can say it was a memory and CPU pig.
    People disabled Yammer on their PCs because of these issues.

    MS should have bought Atlassian, and picked up HipChat (and a slew of other actually useful tools) in the process.

    Maybe they were just buying a list of subscribers...?
    briank@...
    • A billion dollar list of subscribers?

      Considering Yammer probably isn't on the radar for 9 out of 10 social media users, how big could the list be?
      dh1760
    • Ugh! Yammer?

      Hi Brian. I don't think 99% of corporate end users know or care about memory or CPU utilisation. I also seriously doubt its about a subscriber list. This is a social enterprise play to help MSFT CRM compete with Salesforce, MSFT Sharepoint to compete with a slew of collaboration/doc management vendors, Office365 to compete with Google Apps (think Google+ for Enterprise) and of course to be 'cool'. I agree Atlassian would be an awesome fit and acquisition but they'd laugh at $1.2B - its clear to me Atlassian (& Accel) will IPO.
      mattclarkenz
  • Yammer advertises iMac

    The irony of having a user with an iMac on her desk of a now Microsoft company on the home page of Yammer.... good stuff.
    jshiner323
    • Ditto for Skype

      Loved the press photo of the Skype CEO with an iMac on his desk!

      Figures, though. Jim Allchin did say that the best PC to run Windows is a Mac!
      shill shooter
  • So many opportunities, so little likelihood of success

    Could this be absolutely massive and game changing? Hell yes. But to be so MSFT needs to see this less as a simple point acquisition and more as a platform startegy for crossing the chasm of innovation. Can they actually pull that off? I'm not so sure...

    more here - http://www.diversity.net.nz/microsoft-buys-yammer-a-two-minute-analysis/2012/06/25/
    benkepes
  • Could be really interesting, but also challenging

    Microsoft has a potential to glue together many of it's business offerings as well as it's Office suite, but is the culture ready to really think, be and implement social? I still think Microsoft's biggest challenge is Microsoft.

    More here: http://greg2dot0.com/2012/06/17/microsofts-challenges-in-social-business-space/
    Greg2dot0
  • Yammer?

    I've never heard of this as software. However, what does Yammer mean?
    To utter or whine in a complaining or peevish manner
    To make (a complaint) loudly or persistently
    Nonsense; jabber
    (source: the free dictionary)
    So now businesses are integrating this nonsense into their business plans? If I were part of a corporation, I'd steer as far clear of this, in any form, as possible.
    janitorman
    • Likewise, what does "Bing" mean? It's just a famous singer's name.

      So, what's in a name?

      Twitter? What the heck does that mean?

      Facebook? Geez, how original. Is it a book with faces, or a book for faces?

      MySpace? Don't wander into "my space" if you know what's good for you.

      Google? Just a big number. But, why?

      Apple? It's just a fruit. Macs? Short for MacIntosh Apples. How dumb. Why would a company take such a name for its identity?

      Perhaps you have the answers, since, you believe that, names always need to have deep meanings behind them.

      So, are you a janitor, man?
      adornoe
  • Microsoft and Yammer

    I don't care, I don't care!
    hawc
  • Why Yammer?

    Is Yammer that popular? The only point to use it instead of Facebook Groups is that you don't need to add your business partner as friend. And Microsoft already has a product, SharePoint, with some of the same features as Yammer.

    - Sara
    http://www.hiredotnetprogrammers.com/
    Sara_Parker23