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Microsoft Commits $1.2 Billion On Yammer

July 27, 2012

John Neumann for redOrbit.com – Your Universe Online

The owners of social network Yammer have accepted a buyout offer from Microsoft of $1.2 billion. Not bad for a business that is not even 4-years old yet. Yammer is a social network for business providing a private and secure environment designed for company collaboration, file sharing, knowledge exchange and team efficiency, think Facebook for business partners.

Despite Microsoft´s hefty investment, the company plans on providing Yammer services for free, reports Caleb Garling for Wired Magazine.

Yammer seeks to find its way into businesses by offering a free service that office workers will adopt with the idea that once their employees are hooked on the product, businesses will pay for tools that give their IT departments more control over the thing.

According to Yammer CEO David Sacks, Yammer will stick with this “freemium” model as it moves under Microsoft´s wing, and it will use the strategy to encourage adoption not only of its own products, but existing Microsoft tools as well.

Although not commenting on the acquisition other than its statement, Microsoft is working to change the way its core business operates in order to keep up with the latest wave of technology.

“Everybody has shifted to this model because its so compelling to let the end users try the software before [businesses] buy it,” Sacks said. “We´re going to look to see if Yammer can keep fueling its own growth – but fuel the growth of Office 365.”

Office 365, the online incarnation of Microsoft´s Office suite of business applications that includes such familiar tools as Word and Excel, is the next big project for Yammer. Microsoft says that it will integrate the network into its business suite, SharePoint, Skype, and Microsoft Dynamics in order to try to accelerate Yammer´s growth, writes Eric Abent for SlashGear.

With a commitment of $1.2 billion, Microsoft certainly seems committed to the expansion of Yammer, which claims more than 5 million corporate users, including Deloitte, Ford, and 7-11.

Andy McLoughlin, co-founder of Huddle, a startup offering online collaboration tools that compete with Yammer, believes Yammer´s acquisition validates the notion that social networks can play into a larger ecosystem of business applications. But at the same time, he questions whether Microsoft can actually make this work with its existing suite of tools, which come from a very different world.

“I think a lot of businesses who have been running Yammer are going to be shocked three months later when they get a call from Microsoft and hear, ℠You´ve been using this tool that you like. How about spending hundreds of thousands of dollars on enterprise software?´” McLoughlin told Wired’s Garling.

“If I was Yammer, the biggest concern that I would have is if [Microsoft] is going to take my nice, friendly brand and re-release it as something like ℠Microsoft Social Cloud Server 2015.´”

Aaron Levie, the CEO of Box, another outfit that seeks to work its way into business using the freemium mode, has been a vocal critic of Microsoft in the past, associating the giant with the software of the past. Levie, according to Garling, has cooled on his criticisms recently, and he now believes that Microsoft is moving in the right direction as it uses Yammer to further consolidate the many tools it offers to businesses.

He compares the move to software giant SAP buying SuccessFactors, another outfit that sought to reinvent business software by moving it online. Indeed, Microsoft is just one of many tech giants who are scrambling to keep up with the new world order. At the very least, you have to say it´s moving in the right direction.


Source: John Neumann for redOrbit.com - Your Universe Online