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Summary:

Microsoft announced Monday that the company has officially acquired social software startup Yammer for $1.2 billion. The purchase was widely reported more than a week ago, but Microsoft confirmed the purchase Monday.

David Sacks Yammer CEO Microsoft Office
David Sacks Yammer CEO Microsoft Office

David Sacks, CEO, Yammer

Microsoft announced Monday that the company has officially acquired social software startup Yammer for $1.2 billion in cash. The purchase was widely reported more than a week ago, but Microsoft confirmed the deal Monday in a press release.

As we noted earlier this month, the purchase could give Microsoft a social dimension to its popular corporate software products. Yammer creates a Facebook-like experience for business clients.

Yammer will join the Microsoft Office division after the acquisition, but CEO David Sacks will continue to lead the group, Microsoft said in the release. Kurt DelBene, president of the Microsoft Office group, offered some thoughts on how Yammer might fit into the Microsoft world in a blog post that accompanied the formal press release:

The combination of Yammer, SharePoint and Office 365 will provide the most comprehensive and flexible solutions for enterprise social networking. Over time, I see opportunity for exciting new scenarios by adding Yammer’s stand-alone service alongside and integrated into our collaboration offerings with SharePoint, Office 365, Dynamics and Skype. I picture people being able to use Yammer to manage and expand their professional relationships, share and collaborate on Office documents, stay informed about content updates, and to seamlessly move from status updates and feeds into voice and video conversations.

Yammer most recently raised $85 million in a February funding round, which brought it to $142 million in total funding. The company currently has more than 5 million corporate users, including customers at 85 percent of Fortune 500 companies, Microsoft and Yammer announced along with the acquisition today.

“We think that Microsoft is a great partner for us,” Sacks said in a conference call Monday with DelBene and Microsoft CEO Steve Ballmer. “I think it’s really the best possible partner in terms of its reach and resources, and its ability to help us scale.”

Ballmer said Yammer’s emphasis on cloud computing fits perfectly with Microsoft’s expansion into that area, and Yammer’s popularity with corporate clients makes it a natural partner:

“What we love about Yammer is that it was built on the notion that things can grow virally,” Ballmer said.

They noted that Yammer will remain in the San Francisco area even after the acquisition with Microsoft, which is headquartered near Seattle.

“When most people thought social networking was for kids, we had a vision for how it could change the way we work,” Sacks wrote in a blog post Monday. “Four years ago, we started paddling out to catch the wave that we’re riding today.”

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  1. Hi Eliza – I work for a CRM supplier here in Houston, TX and Microsoft Dynamics is one of our most popular products. I’ve been watching this Yammer deal closely and am excited to see how it will be integrated into social CRM. It’ll also be interesting to see what the other big guys do to up their social-CRM game!

    Anyhow, thanks for sharing! – Aly

  2. Vijaya Prasad Monday, June 25, 2012

    Reblogged this on vijaya prasad.

  3. Mansion House Monday, June 25, 2012

    Sounds like Microsoft is being very aggressive in the acquisition market. But will this deal be worthwhile? Log onto: http://www.abhirdayaram.com/2012/06/19/microsofts-late-acquisition-yammer-fruitless-purchase/ to see background to this debate.

  4. Buying Podio or free Bitrix24 would make MUCH more sense. Both are growing faster and have more options.

  5. As much as I like yammer, I think startups that use stronger freemium model (http://bitrix24.com comes to mind immediately, but there are others), will byte a good chunk out of their market share.

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