What The Yammer Acquisition Says About Microsoft – And Enterprise Social Networking

Much of the recent analysis on Microsoft’s $1.2B acquisition of Yammer focused on the slick application Yammer had built, their rapid viral adoption, and how it represented the assent of the social enterprise as the next hot category. Certainly all this is true, as Yammer is a very simple and intuitive application, and had a devoted following of several million users. And Microsoft’s $1.2B speaks volumes about the value of the social enterprise to an established industry leader.

But this acquisition also says a lot about Microsoft and their current state of mind. Something drove them to merrily pay $1.2B for a company with less than $20M in revenues. $1.2B might be pocket change for Microsoft, but it is still an incredible amount of money.

For that amount of money, Microsoft could have hired 1,200 developers and paid them a handsome salary for 10 years to build a social application on an unprecedented scale.  Anything Microsoft built would be backed by a well-funded marketing machine and an army of Microsoft sales reps and channel partners capable of selling it worldwide in massive volumes. But the company chose instead to pay that fortune for an existing application with a relatively modest user base and revenues.

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