Is Microsoft’s late acquisition of Yammer a fruitless purchase?
The world’s biggest software developer Microsoft has announced its intention to purchase social network developer Yammer for $1-billion in a move which will finally announce the giant’s arrival on the social media stage.
The announcement of the deal comes off the back of Salesforce.com’s acquisition of Buddy Media and Oracle Corps recent acquisition of two similar companies.
I feel that the move will be beneficial to both companies as Microsoft now finally has a social media presence and it can take all of the advantages that Yammer has to build on its already popular Microsoft Office and Sharepoint platforms.
The deal will also be beneficial to Yammer as the majority of the world’s users use Microsoft Office as its main document building tool. As at 2010, Microsoft reported that 94% of the world, or 500 million users, used Microsoft Office with its closest competitor Adobe only holding a 4% share of the market.
Although some may say it is late, in a world where social media is playing a more important role in the way the public access and uses information a social media presence can be seen as a non-negotiable item.
The deal has met its critics. Trip Chowdhry, a market analyst at Global Equities Research, has criticized the proposed acquisition, saying that it would not have a significant impact on Microsoft’s growth prospectus.
He has some valid points; the main point of criticism is that Yammer doesn’t have superior features or anything over competitors. Another point of criticism is that Microsoft would not be offering anything different to what Salesforce and Oracle already offers.
But, although late, I feel that Microsoft needs to break into the market. However, the price paid for the deal is slightly excessive and is an admission to past failures in this market.
The deal will also not be a wholesale solution for Microsoft. Even with the deal’s high price tag, there are many aspects to Yammer which need to be developed and will take significant investment to do so. There is also the danger of Yammer disappearing into the Microsoft world and it is certainly small enough to do so.
While common sense would point to the deal being more beneficial towards Yammer, it gives office users something which they have lacked in the past and the company has now gained the tools to compete with competitors on an even keel and to possible grow the business despite analyst’s warnings.