Microsoft announces Yammer acquisition, launches social strategy

Microsoft officially announces Yammer acquisition, an effort to accelerate social strategy and cloud services.

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The social media trend continues to sweep through the enterprise, and many vendors are getting on board with UC offerings aimed at promoting an enterprise social strategy. Microsoft officially joined the ranks by announcing its highly anticipated Yammer acquisition.

Microsoft plans to purchase Yammer's enterprise social networking service for $1.2 billion in an effort to accelerate Microsoft's enterprise social strategy, wrote Kurt DelBene, president of the Microsoft Office Division in a recent blog post.

"Social computing has made a huge impact in how we connect with information and each other [and] businesses are just starting to take advantage of the benefits of social computing," he wrote. "I see opportunity for exciting new scenarios by adding Yammer's stand-alone service alongside and integrated into our collaboration offerings with SharePoint, Office 365, Dynamics and Skype."

The Yammer acquisition will improve Microsoft's social strategy

Yammer -- a service with nearly five million users -- helps Microsoft's social strategy to catch up with the competition, said Irwin lazar, vice president and service director for Nemertes Research.

Enterprise social media use has grown from 43% to 60% in the last year, according to research by Nemertes. "Social adoption is growing, and Microsoft was going to start losing customers to companies like Cisco and Jive," Lazar said.  

Compared to Cisco WebEx Social (formerly Quad), IBM Connections and Jive social software for the enterprise, Microsoft didn't have a good social platform to bring to the table, he said, noting that Microsoft used Newsgator -- an enterprise social platform layered over SharePoint -- as part of its weak social strategy prior to the Yammer acquisition.

Speculation exists around why Microsoft acquired Yammer instead of Newsgator. Lazar noted that Yammer plays into the cloud strategy Microsoft is developing for UC.

"By having a Software-as-a-Service [SaaS]offering, Microsoft can integrate Yammer more easily into Office 365 rather than figuring out how to get Newsgator in the cloud," he said. 

While the Yammer acquisition is an important step for Microsoft's social strategy, Melanie Turek, vice president of research at Frost & Sullivan Inc., questions the high price tag.

Of Yammer's nearly five million users, only one million are paying users, an annual revenue of $25 million.

"The fact that they have the technology now is a good thing, but it's hard to see how paying close to 50 times earnings makes sense," she said.

More on enterprise social strategy:

How enterprises can create an effective social media strategy

Video spurs social media strategy success

Kicking the fear out of the enterprise social media strategy

What will the Yammer acquisition mean for Lync, Sharepoint?

Yammer will join the Microsoft Office 365 suite, according to Microsoft, but the company has not yet specified how the social networking service will integrate with Microsoft's enterprise UC tools, Lync and SharePoint.

Brad Shimmin, principal analyst for Current Analysis, believes that the Yammer acquisition will make Lync and SharePoint better products.

"Yammer developers have built great points of integration with SharePoint and Lync and with Microsoft Dynamics," he said. "Once [Yammer] is inside Microsoft Office 365 and single sign-on and federation [of records] between products is completed, I think it's going to be a quick transition."

Microsoft will continue to offer Yammer as a standalone service, Shimmin said. And current SharePoint users will also have time to learn how Yammer will run alongside or within the product.

Yammer will be an easy sell for Microsoft shops that are exploring a social strategy, Lazar said, noting that Yammer should be fairly integrated with SharePoint and Lync by next year.

"Yammer has a robust set of social features, activity streams and the ability to get updates and events from different applications," he said. "Microsoft has ignored the social market for the past two years, but now they can fight for this business."

Truly tight integration with Yammer and Microsoft products might take more time, Turek said.

"Microsoft moves slowly," she said. "Hosted services integrating with premise-based applications is hard to do and will take time."

Let us know what you think about the story; email: Gina Narcisi, News Writer.

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