SHARE



ABOUT THE AUTHOR


Melanie Turek
Melanie Turek is Vice President, Research at Frost & Sullivan. She is a renowned expert in unified communications, collaboration, social...
Read Full Bio >>
SHARE



Melanie Turek | June 26, 2012 |

 
   

Microsoft's Yammer Play: Too Much, Too Late or Too Soon?

Microsoft's Yammer Play: Too Much, Too Late or Too Soon? Most organizations have not deployed enterprise social tools--and they have few plans to do so over the next 12 to 36 months. Did Microsoft pay too much and move too soon to enter this market?

Most organizations have not deployed enterprise social tools--and they have few plans to do so over the next 12 to 36 months. Did Microsoft pay too much and move too soon to enter this market?

In a deal officially announced this week, Microsoft is acquiring Yammer for $1.2 billion--a steep price that will be tough to justify any way the vendor plays it. Yammer, an enterprise-grade social networking service that brings Facebook-like features to a closed business environment, is a success story. But it's hard to see how Microsoft has done anything but paid too much for a service that most of its customers are years away from deploying--if they opt to do so at all.

Today, Yammer claims to have about 5 million users, close to 1 million of whom pay for the service. That's an excellent conversion rate, but with annual revenues estimated to be about $25 million, Microsoft paid close to 50 times revenue for the company. Obviously, the numbers alone don't warrant the $1.2-billion price tag. What would? In this case, nothing.

Clearly, Microsoft is playing catch-up in the social networking space. IBM and Cisco have had tools in this area for awhile now; along with a multitude of start-ups like Yammer, they've made it possible for companies to give their employees access to a closed, secure social media site for internal networking, information sharing, and loose collaboration.

I'm a big believer in the value of such sites for businesses with remote workers and/or geographically dispersed operations. They make it easy for employees to find information--especially the kind that resides in their co-workers' heads--and locate expertise within in the organization. But just as important is their ability to create a sense of community among remote workers, many of whom might not see each other live and in person more than once or twice a year--if ever. Just as Facebook makes it possible to stay in touch with old friends from far-away places, services like Yammer allow employees to deepen their relationships with one another--and partners and customers, should the company so desire--by sharing personal and professional information on a regular, online basis.

Microsoft does not have such capabilities within its current toolset, and that was a glaring omission. But building a social networking tool shouldn’t be difficult for a company with as many developers as work in Redmond. Selling it is. And that’s where the $1.2-billion price makes no sense.

Microsoft says Yammer will be part of its Office division, which answers the first question many observers had when the rumor of the acquisition first surfaced two weeks ago. That's not to say the vendor couldn't integrate Yammer into Dynamics, its CRM application, to better compete with Salesforce.com (which, thanks to Chatter, is the clear leader in social CRM). But with the organizational move, Microsoft is saying it wants to make Yammer a part of its broader UC suite. That's a sound decision, although it remains to be seen how and whether Microsoft will integrate a hosted service with its on-premises applications; Yammer's immediate sweet spot is Office 365.

And it's hard to see how Microsoft couldn't have developed its own social media platform for a heck of a lot less than what it paid for this one.

Next page: A Question of Timing?





COMMENTS



August 16, 2017

Contact centers have long been at the leading edge of innovation in communications technology, given their promise of measurable ROI and the continual need to optimize customer interactions and sta

July 12, 2017

Enterprises have been migrating Unified Communications & Collaboration applications to datacenters - private clouds - for the past few years. With this move comes the opportunity to leverage da

May 31, 2017

In the days of old, people in suits used to meet at a boardroom table to update each other on their work. Including a remote colleague meant setting a conference phone on the table for in-person pa

August 16, 2017
World Vision U.S. is finding lots of goodness in RingCentral's cloud communications service, but as Randy Boyd, infrastructure architect at the global humanitarian nonprofit, tells us, he and his team....
August 11, 2017
Alicia Gee, director of unified communications at Sutter Physician Services, oversees the technical team supporting a 1,000-agent contact center running on Genesys PureConnect. She catches us up on th....
August 4, 2017
Andrew Prokop, communications evangelist with Arrow Systems Integration, has lately been working on integrating enterprise communications into Internet of Things ecosystems. He shares examples and off....
July 27, 2017
Industry watcher Elka Popova, a Frost & Sullivan program director, shares her perspective on this acquisition, discussing Mitel's market positioning, why the move makes sense, and more.
July 14, 2017
Lantre Barr, founder and CEO of Blacc Spot Media, urges any enterprise that's been on the fence about integrating real-time communications into business workflows to jump off and get started. Tune and....
June 28, 2017
Communications expert Tsahi Levent-Levi, author of the popular BlogGeek.me blog, keeps a running tally and comprehensive overview of communications platform-as-a-service offerings in his "Choosing a W....
June 9, 2017
If you think telecom expense management applies to nothing more than business phone lines, think again. Hyoun Park, founder and principal investigator with technology advisory Amalgam Insights, tells ....
June 2, 2017
Enterprises strategizing on mobility today, including for internal collaboration, don't have the luxury of learning as they go. Tony Rizzo, enterprise mobility specialist with Blue Hill Research, expl....
May 24, 2017
Mark Winther, head of IDC's global telecom consulting practice, gives us his take on how CPaaS providers evolve beyond the basic building blocks and address maturing enterprise needs.
May 18, 2017
Diane Myers, senior research director at IHS Markit, walks us through her 2017 UC-as-a-service report... and shares what might be to come in 2018.
April 28, 2017
Change isn't easy, but it is necessary. Tune in for advice and perspective from Zeus Kerravala, co-author of a "Digital Transformation for Dummies" special edition.
April 20, 2017
Robin Gareiss, president of Nemertes Research, shares insight gleaned from the firm's 12th annual UCC Total Cost of Operations study.
March 23, 2017
Tim Banting, of Current Analysis, gives us a peek into what the next three years will bring in advance of his Enterprise Connect session exploring the question: Will there be a new model for enterpris....
March 15, 2017
Andrew Prokop, communications evangelist with Arrow Systems Integration, discusses the evolving role of the all-important session border controller.
March 9, 2017
Organizer Alan Quayle gives us the lowdown on programmable communications and all you need to know about participating in this pre-Enterprise Connect hackathon.
March 3, 2017
From protecting against new vulnerabilities to keeping security assessments up to date, security consultant Mark Collier shares tips on how best to protect your UC systems.
February 24, 2017
UC analyst Blair Pleasant sorts through the myriad cloud architectural models underlying UCaaS and CCaaS offerings, and explains why knowing the differences matter.
February 17, 2017
From the most basics of basics to the hidden gotchas, UC consultant Melissa Swartz helps demystify the complex world of SIP trunking.
February 7, 2017
UC&C consultant Kevin Kieller, a partner at enableUC, shares pointers for making the right architectural choices for your Skype for Business deployment.
February 1, 2017
Elka Popova, a Frost & Sullivan program director, shares a status report on the UCaaS market today and offers her perspective on what large enterprises need before committing to UC in the cloud.
January 26, 2017
Andrew Davis, co-founder of Wainhouse Research and chair of the Video track at Enterprise Connect 2017, sorts through the myriad cloud video service options and shares how to tell if your choice is en....
January 23, 2017
Sheila McGee-Smith, Contact Center/Customer Experience track chair for Enterprise Connect 2017, tells us what we need to know about the role cloud software is playing in contact centers today.