Microsoft Takes Page From 1980s Playbook by Acquiring Yammer

Microsoft LogoHave you ever heard of Wordstar, Lotus 1-2-3, Harvard Graphics, cc: Mail or Netscape Navigator?  If not, you are probably too young to remember a PC world that was not yet dominated by Microsoft Windows.  Those that know of these products may recall that they were once the most innovative, best-of-breed and market-dominating software for such PC applications as word processing, spreadsheets, graphics, email and web browsing, respectively.    That is, until Microsoft decided to buy/build similar software programs  (e.g.,  Outlook, MS Word, Excel,  PowerPoint, Paint and Internet Explorer) and bundle them with MS Windows.  Due to bundled pricing, a common user interface and tighter integration, the original innovative products became obsolete once Microsoft took these actions.

Now, hot on the heels of’s acquisition of Buddy Media (to complement Radian 6 and Chatter for a strong social business offering), Microsoft announced Friday that they are acquiring Yammer for $1.2B. Yammer, provides Facebook-like features (e.g., profiles, activity streams) to improve the collaboration within enterprises. Microsoft of course already has a product a product within this space, SharePoint.  However SharePoint is generally simply used for content and document management.  While it is a favorite of IT, adoption among employees is generally poor.  This is generally attributed to difficulties users experience when  trying to find the information housed within SharePoint.  It also fails to have a social component that has been a critical aspect of the consumerization of IT, the underlying trend that has forced IT organizations to adopt some of the more compelling experiences that employees have in their personal lives.

Microsoft can take a page from its 1980s playbook by bundling Yammer functionality with numerous Microsoft products.  This might not only provide the most significant upgrades to such products to date, but also weaken or eliminate some of their competitors within the space.  By integrating Yammer functionality with several existing Microsoft applications, MS can provide product bundles that weaken or even eliminate competitors, as they did in the 1980s. By integrating with MS Outlook, Microsoft could bring Yammer’s social business functionality to the PC application that is almost always open on most  employee’s desktops. Rather than going to a separate application, relevant activity streams would be visible from within Outlook itself.  Integration with MS Office applications, moreover, will enable users to easily collaborate to co-author Word documents, Excel spreadsheets and PowerPoint presentations.  Better collaboration within MS Project would ensure that updates to project plans can more easily be seen so each member on the project team can adjust their work accordingly or negotiate further changes.

Yammer’s potential also extends to Microsoft’s enterprise solutions. By integrating Yammer functionality with Microsoft Commerce Server, Microsoft may be able to offer a social commerce solution, whereby the opinions of community members could influence the purchase decisions of others.  And of course SharePoint itself can be improved dramatically via integration with Yammer’s user-friendly, social features, as described above.

What does this mean for other vendors who have developed social business software (SBS)?  For instance, Jive software also integrates with MS Outlook, Word, Excel, PowerPoint and SharePoint.  But won’t Microsoft have the advantage by owning the source code for these programs?

Upon learning of the acquisition, Jive Chairman and CEO Tony Zingale gave eWEEK an optimistic assessment of the acquisition, as one would expect.

“No question that this news is a huge validation for the space. If you remember, the world’s largest software supplier claimed for at least five years that the SharePoint content management system was, in fact, their social offering. They tried in ’07, they tried in 2010; they were going to try in 2013 to put out SharePoint versions that were going to add social features. So by evidence of this announcement today, a $1.2 billion all-cash purchase, of a company that was nothing more than an activities stream and a ‘freemium’ supplier, it’s pretty significant evidence that as the enterprise retools, that Microsoft was behind. And they needed to take action to integrate social capabilities–not only into SharePoint, but also Office 365, their CRM tool Dynamics, and a host of other things inside that Microsoft stack.”

Yammer also has several known flaws.  Probably the most notorious shortcomings are related to its poor administrative features and security. These, of course, can easily be fixed by Microsoft, a true enterprise player. However, Yammer’s SBS functionality is itself quite limited when compared to other solutions available in the marketplace, as noted above by Zingage and what Moxie CEO Tom Kelly told eWEEK: 

“Microsoft’s acquisition validates the critical nature of social connectivity as an enterprise capability. However, the activity stream supported by Yammer is only one slice of the value possible through enterprise collaboration. If over the coming years MSFT is able to build out a fuller capability, they and the companies that invest in this technology  might see a return on their investment. What the market needs to know is that fuller capabilities are available now…”

Yammer also lacks the the externally facing features that other  Software Business Solutions (SBS) have to:

  • Provide better and more cost-effective customer service experiences.  Jive, for example, empowers customers to answer one another’s questions and customer service representatives (CSR) to find expertise throughout the enterprise to quickly provide better answers than CSR scripts or FAQs could possibly contain.  Such social customer service solutions improve customer service and engagement while reducing service-related costs.
  • Enable sales and marketing to leverage the entire enterprise to respond more quickly to customers and support marketing campaigns.  This capability impacts both top line revenues and bottom-line profits by facilitating customer acquisition and retention while increasing the productivity levels for sales and marketing personnel.
  • Drive product innovation by collaborating with customers, partners and suppliers.
Therefore, vendors that provide such externally facing social business solutions–including Jive, Telligent, Moxie, Chatter and Lithium–may fare better than those who do not.  The biggest loser appears to be Newsgator, who served as Microsoft’s partner to build social business functionality around SharePoint prior to the acquisition of Yammer.
So what do you think of Microsoft’s acquisition of Yammer?  
How do you think it will impact other vendors who provide social business collaboration solutions?  
How do you expect other large players (e.g., Oracle, Adobe and IBM) to react to this news?
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