The deal is real — Yammer has agreed to sell itself to Microsoft … but it’s the rest of the story and the analysis that’s really interesting.
The Wall Street Journal is now confirming that Yammer has agreed to sell itself to Microsoft for US$ 1.2 billion. They cite their source as a “person familiar with the matter” who could be anyone, maybe even Yammer founder and CEO David Sacks.
Happy Birthday to Me
While the latter is pure speculation, Sacks seems to be a little more into living-out-loud than being quiet right now. This weekend he’s throwing himself a “birthday party” at Fleur de Lys, a US$ 125 million mansion in Beverly Hills. (This according to Business Insider editor Owen Thomas who exchanges tweets with Sacks @davidsacks).
Snoop Dogg is supposedly the featured entertainer and guests are to come in 18th century costumes. The party invitation purportedly says “Let him eat cake,” a takeoff on Marie Antoinette’s “Let them eat cake.”
Silicon Valley’s A-list was invited to the party. Some felt the timing of the party is a little suspicious given that Sacks' actual birthday is in the middle of May.
What Yammer Brings to the Table
Yammer, as mentioned yesterday, offers collaboration, file sharing and project management at a range of price points, with a free basic offering topping out at a US$ 15pupm enterprise deal with SharePoint integration. It is used by more than 200,000 companies around the world, according to the company's Website, including DHL, LG, Nationwide Insurance, Ford Motor Co., Shell, Capgemini and Razorfish.
The Walls Street Journal owned tech blog, AllThingsD says that Yammer's claim of having four million corporate users is laden with “fuzzy numbers.”
“Many start using the service for free, experiment with it, but never turn out to be regular, daily users,” reports Arik Hesseldahl, the post’s author. “Fewer still ever convert to paid status. Yammer has said in the past that its conversion rate is about 20 percent, which works out to about 800,000 paid seats.”
Sweet deal for Yammer? PandoDaily’s editor, Sarah Lacy, who is going to the party, doesn’t think so. The timing (of the sale, not the party) is off from her point of view. In a post written when the acquisition was nothing more than a rumor, Lacy pleaded with Sacks, ”Don’t sell to Microsoft. Let’s just celebrate your birthday and nothing else this weekend, okay?”
Titling the post "Don’t Sell, David! Why Yammer Is Different than Skype or Instagram," she writes,
This space (cloud, collaboration, enterprise social) is still rapidly expanding, changing, and innovating. And if Yammer sells to Microsoft, it’ll take itself out of the game. I just have no confidence Microsoft would actually give the product the support it needs. Because Microsoft understands social even less than Google does."
According to Lacy, Yammer hasn’t yet achieved its potential and its growth could be stunted if acquired by Microsoft.
Tweeters who think like Lacey are posting comments like “From Yammer to Stammer”
Happy Birthday to Everyone
But many other analysts and bloggers who are looking at the Microsoft/Yammer deal see it as a boon for both Microsoft and Yammer customers.
The wins for Microsoft are clear — Yammer can provide the collaboration and social functionalities that Sharepoint lacks. It could also help to catapult Microsoft from being an old-school desktop software provider to becoming one that offers a modern, compelling user experience for the new user, a tagline that Content Management vendor Documentum often uses.
And Yammer, and its users, could benefit from Microsoft’s infusion of cash because it’s apparently “still buggy” offering could be improved.
Where Yammer users might be disrupted, in not such a favorable way, is that it’s likely that Yammer’s Freemium model will go away. “It’s not in Microsoft’s DNA,” say the analysts. Naysayers also fear that Yammer’s innovative abilities, and Yammer itself, will disappear within Microsoft.
The challenge for Microsoft then is to hold on to Yammer’s talent, to embrace the ingenuity of a team that built a US$ 1 billion company in a few short years, and to let Yammer’s “young” lead, rather than leave, the company.