Microsoft’s reported $1 billion deal to buy Yammer isn’t done yet, but the move — despite what many see as a too-hefty price tag — could make sense.
Yammer has big name recognition in the burgeoning field of enterprise social networking — its product lets colleagues chat about projects and share tips in a business-defined context. Microsoft Office remains the market-leading productivity suite despite incursions by OpenOffice, LibreOffice and Google Apps rivals. Pairing the Office with Yammer makes sense, as Forrester Research analyst Rob Koplowitz wrote in Forbes.
Or the software giant could go narrower and yoke Yammer to the Microsoft Business Solutions’ CRM and ERP products — ripping a page out Salesforce.com’s Chatter playbook. Or it could do both and put Yammer everywhere. Right now, Microsoft wants workgroups to collaborate using SharePoint on the backend but many IT people find SharePoint a bit of a hairball to implement and support. Microsoft also has its own instant messaging client, but what’s a little overlap among friends?
Whatever the case, new IDC research shows this might be a good deal for Microsoft as more businesses want to deploy enterprise-class chat. IDC found that nearly all the vendors in this market showed double-digit growth from 2010 to 2011, with IBM and startup Jive delivering a whopping 70 percent growth over that period. (Jive, which went public December, has seen its share price rise 17 percent this year, closing Friday at $18.67.) But Yammer beat them all — showing year-over-year growth of 132.3 percent in that time frame. Presumably that is revenue growth — there’s no word on profitability.
According to a research note by IDC Group VP Michael Fauscette:
Companies are turning to social software in increasing numbers as they look for ways to increase collaboration, improve both business and individual worker productivity, and efficiently manage a growing deluge of content and information … Compartmentalized and specific collaboration is still required by many organizations and traditional collaborative applications providing closed loop and B2B communications will retain their existence in organizations alongside more open social solutions.
But the interest is there and that’s why a cool billion (or $1.2 billion) for Yammer might not be the worst idea Microsoft ever had.