Yammer deal gives Microsoft much-needed clout in social business market, says analyst

By Sooraj Shah
26 Jun 2012 View Comments

Microsoft's agreement to acquire Yammer for $1.2bn (£768m) will enable it to catch up with rivals in the fast-growing enterprise social networking arena, according to Gartner research director Larry Cannell.

Cannell said that Microsoft must have considered acquisitions by rival technology vendors who were moving ahead of it in the enterprise social network space, making it realise that it needed to compete.

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"There has been an increase in interest within companies for these solutions and sites. Microsoft saw their competitors move ahead of them; the likes of Salesforce.com with Chatter, Oracle with its Oracle Social Network, IBM Connections and Jive.

"I think the acquisition of Yammer will allow Microsoft to compete as its social offerings were not competitive before. It will be a strong competitor in the enterprise social market," he said.

Cannell said that Microsoft had dropped behind as they were slow to realise the benefits of social networking.

"The acquisition is recognition from Microsoft that enterprise work is no longer just centred around contact and email, and that these social network products are helping people work together more cohesively and helping expose and share information that was previously locked into email systems or as documents on fileshare," he said.

This point was re-iterated by Richard Britton, managing director of cloud integrator CloudSense.

"Traditional software vendors like Microsoft were not the innovators in this space but they have realised that social collaboration is maturing and delivering business benefits," he said.

Microsoft said that it will look to integrate Yammer with many of its applications, something which Britton was not surprised about.

"With the capital that they can deploy in the sector, expect to see increasing levels of integration into enterprise applications and in this case the Microsoft stack," he said.

Gartner analyst Cannell suggested that this could spell the end for social networking solution NewsGator.

"I think there are some real questions about NewsGator's future given that they are a Microsoft SharePoint-based application and run entirely within it. NewsGator integrates tighter than Yammer with SharePoint but [the acquisition] will raise questions for customers," he said.

Cannell went on to say that being based in the cloud has allowed Yammer to innovate quickly and that its main differentiator from other enterprise social networks is its user interface.

"The experience is similar to Facebook, when people start using it they feel comfortable with it and find it intuitive so their user experience is good," he said.

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