It's official. In an announcement that surprised no one, Microsoft confirmed that it is acquiring Yammer, a social enterprise startup based in San Francisco, for $1.2 billion in an all-cash deal.
Yammer creates private, cloud-based social networks for businesses, primarily by using activity streams to promote collaboration among workforces. The company boasts a user base of 5 million and a customer roster that includes 85 percent of the Fortune 500.
The firm, founded in 2008 by former PayPal COO David Sacks, has attracted over $140 million in funding from venture capital firms that include Charles River Ventures, Emergence Capital Partners, Founders Fund, US Venture Partners and Draper Fisher Jurvetson.
Plans call for Yammer to become part of Microsoft's Office division. The team will still report to current Yammer CEO David Sacks.
Microsoft's Big Plans for Yammer
In a statement announcing the buy, Steve Ballmer offered some clues as to how the software giant will integrate Yammer into its portfolio of products. "Yammer adds a best-in-class enterprise social networking service to Microsoft's growing portfolio of complementary cloud services," said Microsoft’s CEO. An infographic from Microsoft's pixelsmiths paints a more complete picture.
Joining the Microsoft and Yammer logos are Office 365, Dynamics, SharePoint and Skype, a hint that Microsoft has big plans for Yammer that cross several disciplines and communications platforms.
The most immediate plans, however, involve SharePoint, Microsoft's enterprise collaboration software suite. Customers of both can already embed Yammer feeds into SharePoint sites.
Drawing parallels between SharePoint and Yammer, Microsoft points out that 80 percent of the Fortune 500 have purchased SharePoint. It indicates that both platforms enjoy overlap among big corporations, and said both are also "growing like crazy.” Yammer is adding 250,000 new users each month while SharePoint blasted to a $1 billion business in record time, according to Microsoft.
As eWEEK reports, some industry observers believe Microsoft’s purchase of Yammer marks the software giant’s recognition that it needs to shore up SharePoint’s social collaboration capabilities. The eWEEK piece cites a blog post written by software developer Oudi Antebi, a former Microsoft employee, in which Antebi said “… I think Microsoft is acknowledging internally that the current version of SharePoint – as well as the next-generation 'Wave 15' version, which is around the corner – doesn’t provide real social capabilities. The company is probably looking at Yammer as a way to close the gap."
Rush to 'Socialize' the Enterprise
Microsoft isn't the only IT company paying huge sums to socialize its software platform.
Earlier this month, Salesforce acquired social media marketing firm Buddy Media for $689 million. Last year, Salesforce took Radian6, a social CRM provider, off the market for $326 million.
Oracle made waves this month by purchasing Collective Intellect, a social intelligence specialist that combines Big Data analytics and the cloud to extract relevant insights from the mountains of unstructured data generated by social networks. In May, Oracle spent a reported $300 million for cloud-based social marketing services provider Vitrue.