Looking at the recent acquisitions in the Social/Collaboration space, like Oracle acquiring Vitrue, Salesforce acquiring Buddy Media, the news of Microsoft acquiring Yammer has not come as a surprise for most of us. What has surprised me and many others is the price that Microsoft paid ($1.2 billion all cash) for a company which had 1 million paid subscribers!

What is Yammer?

For starters, Yammer is a private social platform for enterprises, essentially functioning as Facebook for an enterprise and workplace. Yammer provides private and secured environment to enterprises where the employees can discuss, collaborate, share files and exchange information in near real time.

My analysis on the acquisition:

Let us try to analyze what this deal means for Microsoft.

The Microsoft CRM Solution (Dynamics) has gradually moved from SMBs to large enterprises over a period of time. During this period it has also moved from a desktop software solution to a web based social networking solution. However it still wasn’t able to compete strongly with the Salesforce CRM. The fact that Salesforce has integrated Chatter with CRM has made it a really interesting proposition for customers. I believe the integration of Yammer will give the much needed boost to the Microsoft CRM, in turn giving the Salesforce Chatter CRM a run for its’ money.

The next growth opportunity where Microsoft is very bullish is Office 365 which is being projected as a real time online Collaboration platform. The integration of Yammer with Office 365 will help Microsoft plug-in the real time communication piece. The integration of Yammer will make Office 365 a real collaboration and social platform.

Microsoft SharePoint is one of the leading Enterprise class collaboration platforms, however it is more popular for its’ content management features and capabilities rather than being known as a truly social platform. This is where Yammer can help Microsoft bridge that gap when it comes to near real time conversations, profiles, feedback, etc. It will eventually mean that the end users will have just one platform for sharing and collaboration.

With this acquisition, there is the challenge of three overlapping platforms available with Microsoft: Lync, Skype, and now Yammer. All three platforms need to converge. Ideally, the best of all three would function smoothly on one platform, but for the time being, my thought would be to use Lync for sharing, Skype for voice and Yammer for communication.

All and all there are bunch of product lines in the Microsoft stack where Yammer could fit in and it will be interesting to see how innovative and bold Microsoft is throughout this integration process.

What it means for Yammer and its’ user base?

As far as Yammer goes, not only does this mean a lot of money but also a strong backing of giant such as Microsoft to scale. Yammer can use MS’s strong content management and search technology without needing to reinvent the wheel, which is where it was heading.

With regards to the user base (freemium ones), I do not see anything drastic happening in the near future, given the past experience of post Skype acquisition. Even though Microsoft is not known for freemium product lines, we are still able to continue using Skype free of cost across all the platforms. It wouldn’t be a surprise if eventually Microsoft may start selling its’ internal products via ads in the Yammer platform continuing to allow users to use the platform for free.

Which Integration will make most sense for Microsoft?

Personally, I think integrating Yammer into the CRM and Office 365 will be the ideal choice for Microsoft because when all said and done, customers love to do all the activities from one platform rather than toggling between applications to carry out their collaborative tasks.