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Microsoft to acquire Yammer for $1.2 billion

Jun 26, 2012 6:41 am by damaster | 6 comments

Rumors had been floating around since mid-June that Microsoft would be acquiring Yammer, the leading enterprise social network used in 85% of the top 500 Fortune companies. The rumor started off as an “overheard” in a nearby café near Yammer’s headquarters, but later it was reported that the deal had been sealed. However, it seemed like both companies were holding off on the announcement given the big news events that was happening last week – including the “mysterious” event that saw the new Microsoft Surface tablets, as well as the Windows Phone Summit revealing Windows Phone 8.

Today Microsoft has officially announced the acquisition, in which the company will acquire Yammer Inc. for $1.2 billion in cash. Yammer will join the Microsoft Office Division, but the team will continue to report to Yammer’s current CEO David Sacks. Below is an excerpt from the press release:

“The acquisition of Yammer underscores our commitment to deliver technology that businesses need and people love,” said Steve Ballmer, CEO, Microsoft. “Yammer adds a best-in-class enterprise social networking service to Microsoft’s growing portfolio of complementary cloud services.”
Launched in 2008, Yammer now has more than 5 million corporate users, including employees at 85 percent of the Fortune 500. The service allows employees to join a secure, private social network for free and then makes it easy for companies to convert a grassroots movement into companywide strategic initiative.
Yammer will continue to develop its standalone service and maintain its commitment to simplicity, innovation and cross-platform experiences. Moving forward, Microsoft plans to accelerate Yammer’s adoption alongside complementary offerings from Microsoft SharePoint, Office 365, Microsoft Dynamics and Skype.

Microsoft previously had an incubator project called OfficeTalk, which served the same purpose as Yammer. There were even talks that Microsoft would commercialize Office Talk, but it appears this idea has been shelved. Mary Jo Foley speculates that Microsoft bought Yammer because it “needed a cooler brand and wanted the cross-platform support”, much like why the company bought Skype last year.

You can read the full press release by clicking here.

This entry was posted in News and tagged Corporate Strategy, Microsoft, Yammer. Bookmark the permalink.

jkth
“Microsoft bought Yammer because it needed a cooler brand and wanted the cross-platform support”
I suspect Yammer’s userbase (4million and rising fast� http://www.thirdforce.com/social-and-informal-learning/whats-with-the-clamour-for-yammer/) compared with OfficeTalk’s (zero) might have had more to do with it.
Gone are the days when Microsoft could build a competitor and have it win just cos it had a Microsoft badge on it (I suspect they learned that from their YouTube competitor, MSN Soapbox. Remember that?)
- Damaster – LiveSide.net
  Question is - will the 4 million users convert to selling Office/SharePoint/Lync products to more enterprises? We have to remember that the buyers here are not the 4 million users of Yammer…
  - jkth
    I’m certain that most of those 4million are already using Office and I’ll bet a fair chunk of them are using Sharepoint too. I think its a defensive move i.e. If customers choose not to use our stuff exclusively then we should probably own the stuff they use instead.
  - Guest
    Unlikely. As jkth says, most are likely already using them (certainly the larger enterprise customers, at least). The question MS was asking was “now that Sharepoint’s features in this area have been poorly received and word is the upcoming ones weren’t much of an improvement, and Officetalk is effectively failed, what happens if someone else acquires Yammer and uses their more consumer friendly UI and rapid adoption as leverage to wean [more] people off Sharepoint, Office, etc.? And they obviously decided that risk was worth paying a big premium to take it off the table.
- Guest
  Not sure what days you think existed when MS products sold themselves in the enterprise? Each was an uphill battle, I can assure you. That aside, Yammer’s high growth rate was certainly part of the attraction. So too was the relative failure of both Officetalk and Sharepoint’s equivalent features. But the main driver is probably the success of Salesforce’s Chatter, in particular, what’s happening in this area generally via new entrants, as well as what other legacy suppliers like Google and IBM are up to. MS found itself behind, again, and wrote a check, again, in an attempt to catch up. I doubt the deal can be justified on financial grounds. But relative to the value of their overall enterprise business, it was probably a small price to pay to try and defend that moving forward.
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Yammers was sold out finally after a long time rumors….