Melanie Turek gave an excellent overview of the Yammer acquisition by Microsoft along with some well-conceived views on of the pros and cons the merger will produce. We'd like to expand on those views by providing some additional insights. By way of full disclosure, Yammer is a customer of Constellation Research, and we happen to use the tool internally. Alan likes social networking tools such as Yammer while Brent likes some of them but has been lukewarm with respect to Yammer. Brent likes Office 365 and actually pays for several accounts (they are not freebies offered by Microsoft), while for Alan Office 365 is sort of anathema (along with other Microsoft products). Hence, this article is a meeting of the minds coming together out of necessity by the markets we cover.
The Yammer acquisition follows a little over a year from the time Microsoft purchased Skype. The Skype acquisition and its $8.5 billion price tag raised more than a few eyebrows. While nothing concrete has been announced with respect to Skype integration with Lync and Office 365, it is clear that Microsoft is moving in this direction. We speculate that we will hear something more concrete about this integration later this year. Clearly, it is going to take a lot of 2-cent/minute PSTN calls to make up the price for Skype.
However, if we think of the implications that Skype brings to Microsoft, imagine the federation Lync will have with the 663 million Skype users. Consider that when Outlook is Skype-enabled, you will be able to click-to-call anyone in your contact list whether they are on Skype, Lync, Messenger, a mobile phone, or a landline. Consider as well that any Office 365 user can already federate with any other Office 365 user, even if they are outside of their organization, with full IM/presence, audio, and video capabilities. Skype integration with Lync will extend this capability to federate between Lync and Skype clients for all users.
Now add in Yammer. Yes, Microsoft bought Yammer to get access to Yammer's 5 million customers, but much more importantly, Microsoft gains Yammer's culture, reputation, and the networks/relationships Yammer and its customers have built up. Yammer is far more advanced than SharePoint when it comes to social networking capabilities; furthermore, it is already a cloud service, so it plays well with Microsoft's huge investment in services delivered through the cloud.
If the integration is done well, we can see the day when every Outlook user (on-prem or cloud) and every Lync user (on-prem or cloud), and every Skype user has access to Yammer's social networking capabilities. Yammer is available in a freemium or premium model, the later providing the advanced administration features typically required by enterprise customers. Consequently, basic capabilities are free and will play well with consumers using Skype and Outlook. It also has enterprise features that will integrate well with business users using Outlook, Lync, and SharePoint. Furthermore, Yammer can provide social networking capabilities for partners, suppliers, and other authorized users outside of an organization's firewall, which will allow those we do business with who are outside of our organization to participate in select social activities such as sharing files, participating in discussion topics, being parts of activities and projects, viewing blogs, and other social networking types of behaviors.
Next Page: Impacts
The social business/collaboration vendor landscape is changing dramatically. Startups such as SocialCast, Podio, Bluekiwi, and Socialtext have become parts of larger organizations, purchased by VMware, Citrix, Atos, and SAP, respectively. Jive Software went public via IPO. Enterprise software vendors such as SAP, Oracle, Salesforce, IBM, Saba and Cisco have introduced new or improved collaboration offerings. Google introduced Google+, which may not be targeted at enterprises today, but we'd be foolish to think a variant will not become part of Google Apps For Business in the future.
Obviously, Microsoft could have developed Yammer-like functionality on its own for less than $1 billion, but that's not the primary thing they were after. For example, if people could instantly launch a Lync Meeting from within Dynamics CRM with their external Yammer networks it would reduce the usage of products like WebEx and GoToMeeting; it would also potentially reduce reliance on Salesforce's Chatter and other competitive products. Similarly Yammer integration with Office 365's documents and spreadsheets could impact the usage of Google Docs, especially among SMB customers who use both Yammer and Google today, turning them toward Microsoft and Office 365. The deep integration is the compelling driver. We believe that ubiquitous Yammer integration with all of Microsoft's other cloud offerings and its Office Suite would significantly enhance the former and bolster the latter, which is one of Microsoft’s bread and butter products.
What Does This Mean For Yammer, Microsoft, and Their Customers?
Integration of Yammer's features into Microsoft's products will most likely not happen for quite some time. However, integration of some Microsoft features into Yammer may occur more quickly. We'd like to see integration with Skype, Lync, and Skydrive be at the top of that list. SharePoint integration for a consistent file sharing capability would also be nice.
Clearly there may be some bumps along the road, as many of Yammer's design philosophies and go-to-market strategies are the very definition of anti-Microsoft. For example, in every meeting we've had with Yammer, they've emphasized how quickly releasing minimum viable versions of features enables them to rapidly get new code into the hands of their customers. With Microsoft's snail-paced three-year release cycles, that is clearly not "the Microsoft way". Perhaps this will change as Microsoft delivers more of its portfolio in the cloud, but given the huge user base and the disruption that changes cause, we doubt it. Just as Microsoft has left Skype alone, we anticipate the same for Yammer, at least in the short term. However, if Yammer integration becomes ubiquitous throughout the Microsoft Office portfolio, as we expect it will, Yammer will of necessity become much more fully incorporated into one of the Microsoft divisions. Furthermore, Yammer did not have huge revenues, so this type of a disruption to Yammer will not harm it much from a revenue perspective. However, we do hope the innovations and culture Yammer inspires will not get squashed by Redmond.
What This Means for Microsoft's Competitors
As mentioned above, over the last year or two the major software vendors such as IBM, SAP, Oracle, Cisco others have being ramping up their social software platforms. While the purchase of Yammer does not immediately improve Microsoft's products (example: it does not fix SharePoint's lack of social features) it will cause decision makers to at least speak with their MS reps in greater detail than they may have in the past. Furthermore, the thousands of MS Partners that work with tools like Sharepoint and Lync will now be taking a look at Yammer. On the technology side, both Microsoft and Yammer are big supporters of the Open Graph protocol, so that should help partners provide all sorts of great integration points between various components.
However, Microsoft is going to have to invest significant effort if it is to catch up with its competitors. For example, Jive already offers excellent integration with Office and Outlook; SAP is already integrating its CRM and ERP products with its social platform; Salesforce is gaining lots of ground with Chatter being integrated with its CRM, Radian6 and Rypple offerings; IBM and Cisco already offer seamless integration between their social platforms and their unified communication tools.
Nevertheless, the opportunities for massive federation between enterprise and consumer along with a thorough infusion of social into the entire Microsoft ecosystem are a compelling proposition worth watching.
Next Page: Final thoughts from Brent & Alan
Alan's Final Comments: Overall, I'm not terribly excited about this deal. I've really enjoyed watching Yammer evolve from the time I competed with them while I was at Socialtext until now where I cover them as an analyst and am also a user myself. On their own they established themselves as one of the dominant social business startups, separating themselves from the pack in a crowded market. I hope that becoming part of Microsoft does not stifle their growth and innovation. I hope that as Microsoft tries to buy its way into a better position in social business it doesn't cause Yammer to vanish into the massive Microsoft portfolio, nor scare aware customers who may not be interested in dealing with Microsoft for political, technical or financial reasons. I am optimistic that in the medium to long term Yammer customers will benefit from tighter integration with the Microsoft portfolio, but I don't think we'll be seeing that materialize in 2012.
Brent’s Final Comments: I’ve not been a Yammer fan because it was a standalone tool, not integrated with anything else in my work flow. I’ve also been very unhappy with the Yammer desktop client and refused to launch Yammer in my browser and keep it up all day long. Microsoft’s purchase of Yammer legitimizes the tool in my mind and will cause me to invest more effort in learning how to better use it within our own business environment. I do hope Microsoft will fix the desktop client so that it as elegant as the Lync client is. I also hope Microsoft will integrate the social capabilities throughout its portfolio in a coherent fashion. Frankly, I've found Yammer confusing and hard to use, so any improvement will be helpful. Now, although we've focused on Microsoft and Yammer, clearly there are other compelling solutions out there, and we do not discount them in any way. Microsoft has a lot of work in front of it to make its Office products and cloud solutions integrate as tightly as Salesforce and Chatter integrate or as IBM Smart Cloud for Social Business and Connections integrate. We should see some interesting developments between Microsoft and Yammer in 2013 or by 2014 at the latest, or we'll consider this acquisition a failure.
Alan Lepofsky Brent Kelly
Alan is Vice President and Principal Analyst at Constellation Research, Inc. He is one of the lead analysts on Constellation's research theme, The Future of Work. Alan focuses on how enterprise collaboration software/social business software can help people Get Work Done. Since 1993, he has been designing, marketing and helping customers deploy software solutions that enable people to connect with their peers and openly share information. Prior to joining Constellation, Alan spent 3 years as Director of Marketing at Socialtext and before that, 14 years in a variety of roles at IBM/Lotus. Alan can be reached at [email protected].
Dr. E. Brent Kelly is a Vice President and Principal Consultant at Constellation Research, Inc. where he has a laser focus on the business communications and collaboration market, emphasizing those emerging and disruptive products and services that are proven to accelerate an organization's business operations including unified communications, social business, video, cloud services, and mobility. Brent can be reached at [email protected].
Alan Lepofsky Brent Kelly
Alan is Vice President and Principal Analyst at Constellation Research, Inc. He is one of the lead analysts on Constellation's research theme, The Future of Work. Alan focuses on how enterprise collaboration software/social business software can help people Get Work Done. Since 1993, he has been designing, marketing and helping customers deploy software solutions that enable people to connect with their peers and openly share information. Prior to joining Constellation, Alan spent 3 years as Director of Marketing at Socialtext and before that, 14 years in a variety of roles at IBM/Lotus. Alan can be reached at [email protected].
Dr. E. Brent Kelly is a Vice President and Principal Consultant at Constellation Research, Inc. where he has a laser focus on the business communications and collaboration market, emphasizing those emerging and disruptive products and services that are proven to accelerate an organization's business operations including unified communications, social business, video, cloud services, and mobility. Brent can be reached at [email protected].
Brent Kelly
Dr. E. Brent Kelly is a Vice President and Principal Consultant at Constellation Research, Inc. where he has a laser focus on the business communications and collaboration market, emphasizing those emerging and disruptive products and services that are proven to accelerate an organization's business operations including unified communications, social business, video, cloud services, and mobility. Brent can be reached at [email protected].
