The great thing about having a big sack of money is that you can buy businesses that have core competencies that your current business does not have. In essence, you are acquiring your way into new markets, into new capabilities, and into new opportunities. Microsoft, the software giant from Redmond, Washington, has not been shy about acquiring its way into lucrative new markets as evidenced by its multibillion dollar purchase of Skype.
Microsoft has always been playing catch up with Google and as Google has made inroads into smart phones and now tablets and also online applications, it appears that in addition to just playing catch up with Google, Microsoft is also playing cat and mouse. It is a strategic chess game against a very formidable competitor that is showing no signs of a similarity to previous competitors that Microsoft has successfully hammered into the ground, namely RealNetworks and most famously Netscape Communications. Google is very nimble and aggressive. While it has failed on some projects in the past, most notably its Buzz service, it has shown a penchant for getting back up again, dusting itself off and putting its all into trying again. That is exactly what it is doing with Google+ service.
It appears Microsoft is looking to not get totally left behind in the social networking space. However, the consumer social networking space seems to be all sewn up by Facebook and its very distant competitor Google+. No wonder then, Microsoft is looking into specialty niches within this larger fast-growing lucrative market. That is why it has bought out Yammer. This internet startup is a software provider that specializes in letting companies build private social networks. This is a great niche for Microsoft because it is already a dominant player in corporate computing.
This purchase of Yammer allows them to bring Facebook-like social networking features to its very successful and established business software suite like Microsoft Office. The business application of Yammer Services is that it allows colleagues to collaborate, also to keep track of what others are doing, and to share information. It is many steps away from standard project management software and also has some fun elements that are reminiscent of Facebook. However, the big difference is this is all business and that is why from Microsoft’s perspective, it is a great plug-in acquisition to its existing offerings.
From a business integration perspective, this is an excellent purchase on Microsoft’s part. One, it gives the company a robust technology it needs to stay relevant. Social networking is not just for fun and games. It is really changing and shifting workers and collaborators’ perspectives on how to share information by acquiring technology that mirrors the shift in perspective Microsoft updates, its productivity and office business software’s features to cater to this shifting new mindset and its software design expectations. The second reason why this is a smart acquisition on Microsoft’s part is it is buying technology to complement and enhance a niche where Microsoft is already dominant. In essence, it is enhancing areas of its business portfolio where it is already strong. Compare this to acquiring your way blindly into a new business that you have had very little previous experience with. This acquisition from this perspective is definitely very different from Microsoft’s acquisition of Skype.