In case you missed the story, Microsoft recently acquired the B2B social media company, LinkedIn, for a jaw dropping $26.2 BILLION dollars (in an all cash deal!).
Just in case you’re not sure what LinkedIn is (I’m going to assume most everyone is familiar with Microsoft), they’re a business oriented social networking site, mainly used for professionals who wish to network with other professionals.
Think of them as the Facebook for working professionals. You sign up for LinkedIn, build up an online profile with them, highlighting your professional career history and work experience, and begin connecting up with other like minded professionals.
Since LinkedIn is a hub for working professionals, it also appeals to sales and recruiting professionals, as it serves as a data goldmine.
In the case of LinkedIn, the money and value is truly in the data it stores … a person’s career history, their job skills, their connections to other LinkedIn members.
A sales person or recruiter needs this kind of data in order to successfully sell or place people at companies.
And LinkedIn knows the value of their data and charges for it accordingly.
But some of you may be wondering what possible reason did Microsoft have for deciding to acquire LinkedIn for such a jaw dropping price??
After all, from a glance, the two companies don’t seem similar at all.
Microsoft’s expertise is writing software for the masses. Things like Microsoft Windows and Microsoft Office.
LinkedIn is not really a software company per se. They are a B2B social media business, much in the same vein as Facebook.
When I first heard about Microsoft’s acquisition of LinkedIn, that was probably the first question that popped into my head … WHY???
What did LinkedIn have to offer that Microsoft desperately wanted to acquire?
Well, it wasn’t the first time Microsoft was interested in such a large acquisition. In early 2015, Microsoft attempted to acquire the enterprise CRM company, Salesforce, for a reported $50+ billion dollars, but failed.
Microsoft has clearly shown interest in a new business arena, in the form of B2B sales.
When you read about Microsoft’s new CEO, Satya Nadellas’s, vision statement for Microsoft, he laid out three key points in his vision.
1. Reinvent productivity and business processes
2. Build the intelligent cloud platform
3. Create more personal computing
You’ll notice nowhere in his vision statement did Mr. Nadella even mention a whisper of their two historical crown jewels and cash cows, Microsoft Windows, their flagship operating system, and Microsoft Office, their suite of business productivity software products.
Protecting Microsoft Windows and Office and relegating anything else Microsoft does, as a secondary concern, was the old way of thinking under the previous CEOs, Steve Ballmer and Bill Gates.
Back in the late 1990’s and early 2000s, Microsoft was riding on the top of the tech world. Their operating system and Office products completely dominated the world of the personal computer landscape.
And at the time, hard as it is to comprehend nowadays, Apple Computer was near bankruptcy, before the return of their founder Steve Jobs.
But nothing in the tech world stays around forever. You either evolve or fall down by the wayside.
Mr. Nadella understands that Microsoft can’t continue to ride on the Windows and Office hegemony forever.
They need to cultivate brand new revenue sources, if they want to have any hope of continuing to grow.
They already completely missed the boat on the rise of mobile smartphones. Apple’s iPhone completely resurrected their company and propelled them to the most valuable company on the planet.
Mr. Nadella knows Microsoft’s core strength is providing productivity software to the masses.
One area that Microsoft has dipped their toes into is the world of CRM (Customer Relationship Management) software. They had already developed some CRM software in the name of their Microsoft Dynamics.
They know that there’s a veritable goldmine in the arena of enterprise B2B software, which is probably what motived Mr. Nadella to attempt to acquire Salesforce.
LinkedIn was their second chance to get a deeper foothold into the world of CRM and sales integration.
LinkedIn has over 400 million registered members. That is a LOT of valuable data, just waiting to be data mined.
And you can bet Microsoft has the infrastructure and know how to do exactly that.
I will also bet they will move the LinkedIn platform directly over into their cloud infrastructure, Microsoft Azure, as soon as the acquisition deal has been officially signed off and approved, which fits right into line with Nadella’s vision statement about monetizing their cloud platform.
I also see other potential integrations into Microsoft’s existing suite of products.
Say I compose a new e-mail message using Microsoft’s flagship e-mail product, Outlook.
When I type in the person’s name into my Outlook compose email window, I can imagine Outlook data minning the vast store of LinkedIn membership data to pull up all sort of additional information about the person I am intending to e-mail … the company/organization they work for, who else exists within their personal network, etc.
Of course, there’s also the obvious revenue stream of continuing to offer the data within LinkedIn to recruiters and sales people. I’m sure Microsoft is already formulating additional upsell opportunities in the form of offering Azure cloud offerings.
Not to mention that Microsoft has an army of developers and professional services teams that could build custom applications around the LinkedIn data and either sell those applications as additional products and/or charge for their development time.
You can bet Microsoft has a whole laundry list of integration plans for LinkedIn.
What if I fire my Windows 10 operating system, and then ask the digital personal assistant, Cortana, who within my personal network, works at particular company, because I am interested in finding new employment there?
Microsoft’s Office suite is hugely popular but currently has no sort of integration with any other social graph data such as LinkedIn.
What if I started a new Excel spreadsheet about the latest company revenue sales figures, but I needed to import some additional sales data from a different division with the same company? What if Microsoft provided a way to allow you import data from your LinkedIn colleagues at the same company?
Microsoft could offer that kind of product/additional service for an additional charge.
This seems to fall directly in line with Mr. Nadella’s mission statement to build products and services within their cloud platform and create new revenue streams outside of their core Windows and Office products.
Of course, time will tell if the LinkedIn acquisition will work out in Microsoft’s favor.
But their acquisition certainly seems to fall in line with their core strengths.