Microsoft buys Yammer for $1.2 billion

Microsoft is paying $1.2 billion for Yammer and is folding the enterprise social networking vendor into its Office division.
Written by Mary Jo Foley, Senior Contributing Editor

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.

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