There have been reports that Microsoft (MSFT) has been in negotiations to purchase a social networking site called Yammer. Many of you must be thinking that Microsoft is crazy for considering this since Facebook (FB) nearly controls the social media market. If Google (GOOG) Plus couldn't take on Facebook, how can Microsoft?
Well, the nice thing about Yammer is that it is not a direct competitor to Facebook. Yammer differs from Facebook in the sense that the site is meant for interaction between employees within a company.
Yammer brings the power of social networking to the enterprise in a private and secure environment. Yammer is as easy to use as great consumer software like Facebook and Twitter, but designed for business collaboration. Connect people, content, and conversations across all of your business applications with productivity software that employees love to use.
Basically, it eases communication amongst employees. For example, if you are trying to send a presentation to group members, you can send it through Yammer and simultaneously collaborate on it.
In a time when corporations are emphasizing efficiency and cutting costs, this could be a great tool for Microsoft to acquire. Microsoft Office is already used by every major corporation in the world and with the type of distribution network Microsoft has, Yammer has extreme growth potential.
Microsoft has had a bad reputation for being an old relic, but if this acquisition can be properly integrated, then Microsoft may have a shot at taking market share in the social media segment. The great part about Yammer is that Facebook and LinkedIn (LNKD) are not considered direct competitors. However, there are competitors such as Salesforce (CRM) and Oracle (ORCL), both of whom have integrated social networks into enterprise solutions.
While both Saleforce and Oracle are in the market, Microsoft still has a strong distribution network due to Microsoft Office. They all have their own niche markets to attract. Facebook is a means for social communication. LinkedIn is for career development. Yammer is for corporate efficiency. If Microsoft is able to grow Yammer heavily, then that means there is plenty of room for monetization.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
