Microsoft bought LinkedIn for US$26.2 billion. The basic question everyone is asking: Why?
One possible answer: to spruce up enterprise social services. After its Yammer acquisition, LinkedIn adds to its enterprise social services ecosystem.
One more thought: acqui-hiring? LinkedIn has data; Microsoft has the software capability to mine it. LinkedIn was not getting anywhere with its wobbling model and volatile market valuation. Microsoft has the capability to give it the impetus it needs to stabilise and scale.
But that high an amount? Isn’t it too high, even for 400million professional users? But then, the tech environment has always been plagued by seemingly bizarre acquisitions that don’t make any sense right off the bat. Cases in point: Facebook bought Whatsapp for US$19 billion when the latter wasn’t even making any money; Dell bought (ongoing) EMC for US$67 billion to form a monopoly in the hardware and infrastructure market.
Coming back to the point, Microsoft’s acquisition of LinkedIn justified? To me, the price is way too steep. What does LinkedIn stand to gain?
- Microsoft’s deep pockets
- Infrastructure and resources
- Ecosystem of cloud platforms
- Ready-to-use plug-and-play software solutions
- Sales teams with proven expertise
But what about Microsoft? What do they have to gain?
- 400million user base
- Established revenue model in the recruitment function
- Integration with existing enterprise social and professional networks
- Bundled solutioning with Dynamics CRM and Azure cloud
Nothing major though. Any glaring whitespace filled? Not really.
All in all, Microsoft just seems to be creating the foundational ecosystem required to compete in a hyper-c0mpetitive enterprise landscape. Apple (with SAP, Twitter, and IBM) is getting somewhere, Facebook has its own platform, and Google & Amazon have captured a large share of the enterprise cloud market. Microsoft had to do something. Is LinkedIn the solution? Seems unlikely, given Microsoft’s history with Nokia…
Even Weiner and Hoffman must be silently thinking – Please don’t do a Nokia with us.