Microsoft forks out $1.2B for Yammer

Software vendor builds up capabilities in enterprise collaboration and social networking with acquisition, which one analyst says could position it as long-term leader in this space.
Written by Kevin Kwang, Contributor on

Microsoft has announced that it will stump up US$1.2 billion in cash to acquire enterprise social networks provider Yammer, which will join the Microsoft Office division headed up by Kurt DelBene.

In a statement on Monday, the software giant stated that Yammer, which was launched in 2008, has more than 5 million corporate users, including employees at 85 percent of the Fortune 500 companies. Redmond plans to integrate the social network provider's offerings alongside complementary offerings such as Microsoft SharePoint, Office 365, Microsoft Dynamics and Skype.

"The acquisition of Yammer underscores our commitment to deliver technology that businesses need and people love. Yammer adds a best-in-class enterprise social networking service to Microsoft's growing portfolio of complementary cloud services," said Steve Ballmer, CEO of Microsoft, in the statement.

The acquisition is subject to customary closing conditions, including regulatory approval, it added.

Rob Koplowitz, vice president and principal analyst serving CIOs at Forrester Research, earlier surmised that Yammer positioned within the Office family would have the potential to end better than if it were headed by Microsoft Dynamics--the software company's CRM (customer relationship management) division.

In his blog, he wrote that Office can position Yammer as part of a broad horizontal collaboration offering. This would mean that Microsoft, in one move, becomes "good at social and places it adjacent to its very strong market offerings in e-mail, unified communications, workspaces, etc".

"This keeps Microsoft customers from having to augment their collaboration strategy with third-party offerings from folks like IBM, Jive, Telligent, and others," Koplowitz stated. "If Microsoft plays their cards right, it seriously cripples the ability for competitors to disrupt its market-leading position in collaboration and likely places itself as long-term leaders in enterprise social [business]."

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