by Jim Lundy
Microsoft announced its $26.2 Billion plan to acquire LinkedIn yesterday. This blog focuses on Microsoft’s acquisition of LinkedIn and its need to focus on Facebook and Salesforce.
Microsoft’s Acquisition Game Plan
While there are lots of takes on this move, there are two critical things to keep in mind whenever Microsoft announces an acquisition: 1) Microsoft wants to create a bigger market and 2) it wants to stop, slow down, or surpass a competitor. It’s also worth noting that this is Satya Nadella’s first major deal, after getting rebuffed by Salesforce in 2015. The Linkedin Deal is a huge price premium and that demonstrates to us how serious Microsoft is taking both Facebook’s and Salesforce.com’s high growth trajectory.
Matching Facebook – The Social Graph and Profile
With LinkedIn, Microsoft will immediately get access to over 400 Million LinkedIn users (who are business and IT professionals), so this gives them a shot at competing with Facebook, which has a large and growing Social Graph. We don’t think LinkedIn ever completely leveraged its vast user base, with the exception of Recruiting and Sales Services.
Facebook continues to monetize its 1 Billion users, by selling advertising and catching the wave of Mobile Collaboration with Messenger, WhatsApp, and Instagram. We expect Facebook to begin to monetize these apps by allowing B2C and B2B enterprises to conduct business via Chat Bots.
We’d also note that Facebook is working hard at finishing its Facebook at Work Platform; a number of talented professionals from Box just joined Facebook to make that happen. This also puts pressure on Microsoft to get alignment on the future of Yammer vs Office 365 Groups (see our recent post).
The CRM Play – Leveraging Salesforce Navigator
Microsoft wants to do more with its Dynamics CRM Business. With LinkedIn, it gets Salesforce Navigator, one of the top Social Selling offerings out there. While this will boost its Dynamics business, it also establishes Microsoft as a stronger player in the the Salesforce Ecosystem.
We expect Microsoft to move quickly to bundle Salesforce Navigator with Microsoft Dynamics. While SN is one option, there are many Social Selling options on the market including PeopleLinx and Nimble.
LinkedIn Challenges
Microsoft will face challenges with LinkedIn. This will involve how LinkedIn is run as well as its focus, which includes some recent acquisitions that Microsoft may want to rethink (i.e. Lynda.com). There has also been a growing tendency within LinkedIn to allow its Services to become spammy, due to its Navigator and Recruiter apps that allow non-contacts to reach out to a user they don’t know. Many executives complain about this recent trend with Linkedin, particularly when a recruiter sends individual emails to their salesforce trying to recruit them.
Trusting Microsoft
The question is, with Microsoft as the owner of LinkedIn, will users and enterprises trust it, or will they look elsewhere? We suspect given the competitive nature that Microsoft has with many firms, that some will not look at LinkedIn in the same manner that they did before the acquisition by Microsoft. The pressure is on Microsoft to prove them wrong.
Time will tell with how this acquisition is integrated into Microsoft, which has a history of rejecting many of its more recent acquisitions. Skype has been a success, but Nokia was a bust and the jury is still out on Yammer.