Microsoft Yammer M&A jammer
An earlier version of this column misspelled the name of enterprise social-networking company Spigit.
BERKELEY, Calif. (MarketWatch) -- All the latest buzz is about the
Enterprise social networking is essentially the next-generation intranet that takes more cues from Twitter and
These networks were made social by companies such as Yammer,
In short, these systems are designed to encourage in-house communication and conversation to improve efficiency.
When these things are deconstructed, it seems as if any company -- especially one like Microsoft (MSFT) -- could choose the "build" over the "buy" option if $1.2 billion is involved. Read more about Microsoft's reported M&A deal for Yammer.
It is a serious indictment of the overall Microsoft prowess if the software giant cannot develop such a network internally, having played with all the elements at one time or another. This is not a good sign.
Some observers also see this apparent buyout as a fiasco, because of how Microsoft spends money on these companies then fails to keep on board the key developers who actually understand the product. Most quickly get fed up with Redmond's corporate meddling and jump ship as soon as they can.
This occurs when Microsoft starts to think that it knows more about how the acquired products work or should be changed, and is often wrong.
Along with Yammer technology, Microsoft would gain Yammer's customers, which include Royal Dutch Shell and DHL, among others. In fact, Yammer claims to do business with 200,000 companies worldwide. If Microsoft pays around $1 billion, this amounts to about $5,000 per corporate customer.
If we are to extrapolate the current value of a single person within these online schemes at $30 a head (a commonly used number), these companies would have to average 167 people to make this deal a good one. Of course, Microsoft does valuations in its own mysterious ways.
Some pundits are saying this is too little, too late for Microsoft, and that the enterprise social-networking party boat sailed some time ago. It seems to me that Microsoft helicoptered in and bought one of the big party boats, so I do not see the problem from that perspective.
I go back to the notion that Microsoft will lose the captain of the boat and get lost at sea.
Microsoft's other problem is that when it comes to developing or even buying anything, the corporate culture gets in the way. It has such a strong influence that everything it does is a reflection of the culture.
This is not the Facebook or even the
This does not bode well for the future of Yammer, and it doesn't seem like something that will do Microsoft any good in the long run either. The deal doesn't sound like a winner.