What do you do if you have a spare 26 billion hanging around? If you are Microsoft, you buy professional social networking site LinkedIn.com. What do you do if you are an avid LinkedIn user, or if LinkedIn is central to your organization’s engagement and marketing plans? Be happy, but just maybe, also be careful.
Firstly, why would Microsoft make the purchase? In many ways, Microsoft is like the Queen Mary: beautiful, but also big, bloated, and slow-to-turn. Its strength has always been on the desktop, with the one-two punch of the Windows operating system and the MS-Office suite. Arguably, it has not been able to capitalize on most of the internet and social media revolution, ceding leadership to the likes of Google, YouTube (eg Google again), Facebook, Twitter, Apple, and many others. Slowly but surely, it has been adding cloud-based services, some built internally (Office 365, Azure cloud platform, and others), and some purchased (such as Skype). So why LinkedIn? Nine reasons…
- Microsoft can sell premium LinkedIn memberships as add-ons to other SAAS (Software as a service) offerings. It can also tightly integrate it with Bing and its ad sales platform.
- Access to proprietary underlying data within LinkedIn can improve Microsoft’s ability to market and to sell.
- Integration with Outlook, Yammer, Dynamics CRM, Skype, Office 365, and other software-as-a-service offerings. No longer need Microsoft’s products be differentiated based solely on technology, but possibly also by being powered by LinkedIn relationships. (One example: a re-worked Dynamics CRM and LinkedIn Sales Navigator product/service.)
- They already own 1.5% of Facebook, but have been unable to parlay this ownership stake into any type of strategic advantage. (It was an astute financial investment though.)
- The purchase will help transform Microsoft from a “pure” software company to a social media company, allowing a deeper integration into people’s lives. This might mean using LinkedIn technology on their Xbox platform and their other consumer offerings.
- The build-vs-buy decision: It is pretty much impossible to build a LinkedIn replacement – it is unique in the marketplace. Their only option was to buy.
- The purchase represents a defensive move against other potential acquirers, including Google, Apple, Salesforce, Facebook, and others.
- As part of the acquisition, Microsoft also got their hands on Lynda.com, arguably the world’s foremost training platform, an important potential advertising venue, and just perhaps, another lease on life for Bing.
- Finally, the very large Microsoft corporate sales organization now has another reason to knock on the corporate America’s doors.
It’s unlikely Microsoft will rush to immediately monetize their purchase. As some users may be spooked, Microsoft may wish to leave LinkedIn untouched for a period of time – much the same way they have done with Skype.
So what does this all mean? On one hand, significant potential, particularly with the integration of LinkedIn data with Microsoft’s SAAS offerings. On the other hand, significant business risk: Do you really want to be tenants in another business’ rental unit? We may think that we own our marketing destiny, but we don’t: if the machinery (or social venue) is owned by someone else, whether we pay with our credit cards or pay with our data, we are tenants. And tenants are subject to the whims of the landlord. (For those who follow, here is a very short list of Microsoft’s technologies that are no longer around: Zune, Silverlight, Windows Live Spaces, KIN, various Windows mobile technologies, Microsoft Money, Windows RT tablets, Windows Media Center, and dozens more.)
This week’s action plan: What would happen if Microsoft fundamentally changed the LinkedIn ground rules? Perhaps by changing the economic model, or by limiting key-for-you functionality, or by using your data for their own purposes? This week, look at these three scenarios, and find a way to limit your exposure. (Hint: one way is to migrate your relationships from LinkedIn into a CRM such as Salesforce.)
Management insight: For a number of LinkedIn employees (and potential employees), the idea of working for the slo-mo Microsoft may be less interesting than working for an exciting new-economy success story. Look for the inevitable exit of veterans, and a somewhat more difficult task of recruiting the best and the brightest. While the acquisition price was $26 billion, much of the company’s future value will be derived through what the current employees will be able to do. The importance of employee retention plans can’t be overstated.
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