MS-Yammer deal: choice or compulsion?

MICROSOFT   SOCIAL NETWORKS    ACQUISITION

Global - Microsoft confirmed its acquisition of workplace social network Yammer for US$1.2 billion, a move experts say is more an act of compulsion than choice.

Following the fast rising trend of major IT firms bringing in social capabilities, the move is deemed as a necessary step for Microsoft.

While it already had its SharePoint application that creates private websites for intra-company projects and also last year bought Skype for US$ 8.5 billion, experts say SharePoint's capabilities are outdated.

"Microsoft already has a product that touts social capabilities - SharePoint Server, but this was designed and built in the pre-Facebook, pre-cloud era,"  said Richard Edwards, principal analyst at Ovum, an analyst firm specialising in the telecoms and technology sectors.

As for Yammer, it is a new breed of enterprise collaboration solution, designed from the ground-up to exploit social, mobile, and cloud technologies, and would sit neatly alongside Skype, Edwards added.

According to Keith Timimi, chairman, VML Qais it is less a case of competing with Facebook and Google and more about the social enterprise software plays of Oracle and in particular Salesforce.com, which built its own Yammer-like platform, Chatter and has recently acquired Radian6 and Buddy Media.

"Since SharePoint has failed as an internal social platform (despite its success as a content management system), I think Microsoft had absolutely no choice but to do a deal," he said.

The move will enable Microsoft to really start to compete with Chatter and Rypple in the social enterprise space, "a market that is going to grow strongly- and cannibalise other enterprise software sectors," he added.

According to Timimi, what's worth keeping an eye on is Jive, a listed Yammer competitor which he says SAP, IBM or HP might want to snap up, and LinkedIn, which is making its first moves in the private network space.

Conversely, social networks like Facebook have also attempted to step into the workforce space (with its BranchOut function), though real success has yet to materialise.

Marketed as a private social network for companies, Yammer runs on a subscription-based model as opposed to an ad-driven model like that of Facebook's, with the basic version of Yammer being free but a offering users more security and integration with company software for a subscription fee.

Yammer will continue to be headed by current CEO David Sacks (pictured).

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