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June 26, 2012

Microsoft Yammer deal ‘a marriage of convenience’

Microsoft desperately looking for way into social space, Tibco CTO tells CBR

By Steve Evans

Microsoft’s $1.2bn purchase of enterprise social network Yammer is a marriage of convenience driven by Microsoft’s need to establish a presence in the social software space, according to Tibco’s CTO Matt Quinn.

Quinn helped to develop tibbr, Tibco’s rival enterprise social network. Speaking to CBR at the company’s Transform event being held in London Quinn said the acquisition seemed, "an odd fit. It seems like one company desperately looking for a branch in a social strategy."

"I think Microsoft is clearly a massively successful company; they are trying to broaden out and deliver more cloud-based services. Yammer is a cloud-based service so it sounds like a bit of a marriage of convenience more than anything else," Quinn added.

Raj Verma, Tibco’s vice president of worldwide marketing, congratulated Yammer on selling for $1.2bn despite never making a profit, and added that the deal validates the enterprise social software space.

"Microsoft has always tried to reinvent a space; they have always tried to be in between two well established places," Verma added. "Take the Surface for example – it’s in between and PC and an iPad. It’s neither this nor that. They try to be everything to everyone and this fits in very well with that strategy," he added. "They can tick the ‘do you have social collaboration?’ category."

While it is still early days for the deal, Quinn said the deal fits well in Microsoft’s battle with salesforce.com.

"If you look at the broader strategy Microsoft is increasingly competing with salesforce.com and vice versa, with salesforce.com competing against Azure with Force.com and Heroku. If I was Microsoft I would be looking at this as an important piece of the puzzle," Quinn said.

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"However I’ve always wondered why Microsoft never built it themselves. Are they going to value the Yammer customers? Is that the target demographic they are going to go after? I think the technology platform Yammer uses is very different from the Microsoft-centric view of the world. There are so many unknowns you do doubt a little bit how successful it’ll be. It’s too early, but the jury is out. And I think the jury is probably a little suspicious," Quinn concluded.

After weeks of rumours, Microsoft finally announced its purchase of Yammer yesterday. The social start-up was founded in 2008 and now has around five million users. Its customers include the BBC, eBay, O2, Ford and Shell. The company claims employees use its software at 85% of the Fortune 500.

For more industry comment on the news, head over to CBR’s expert reaction page. You can also read a Q&A with Yammer CEO David Sacks here.

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