Enough about Micro$oft! (OH GOD THE 90s JOKES)
The LinkedIn deal! US$26.2 billion, at about US$196 per share. This valuation is down from the high in early 2015 of about US$33.5 billion, but up from the low of about US$100 per share earlier 2016, and a massive premium on whatever it was last week. Linkedin’s shares have bounced skywards quickly.
The question is of course, is LinkedIn worth the money?
Vox comments on this quite nicely:
But this is no blunder. LinkedIn isn’t a very cool company, but neither is Microsoft, and LinkedIn has a thriving business focused on helping professionals find jobs and companies find workers.
Beyond the dollars changing hands, the acquisition of LinkedIn cements a broader shift in Microsoft’s corporate strategy that many consumers still haven’t noticed. Microsoft’s early success came from dominating the market for PC software, followed by a period of struggle in which it tried to basically copy that business over to the mobile world and failed.
But under the leadership of relatively new CEO Satya Nadella, Microsoft is shifting to become a company that primarily sells online services to business customers. LinkedIn fits this new strategy perfectly, and it will help Microsoft both broaden the set of business customers it can serve and deepen the relationship with those it already serves.
Yahoo expands on this with a view on what Satya Nadella is targeting:
This move is really about Salesforce and human resources cloud software. Nadella sees LinkedIn data as a way to reinvent these massive markets.
He’s going to marry LinkedIn with Microsoft’s Dynamics and Office 365. Dynamics is Microsoft’s customer relationship management (CRM), HR, and accounting apps.
It’s an extremely savvy deal, that could fill so many of the gaps that Microsoft has struggled with.
- Community. Ohh boy, and what a community. Some 433million users, comprising of a large % of executives, middle and senior management from around the world, all building their network, posting white papers and recommending each other. Microsoft has always eyed the cachet of community with envy, but always struggled to recognise their ambition. Let’s also make it clear – a dominant % (I’d bet easily over 90%) of that LinkedIn user base already uses Microsoft products in an almost daily basis. It’s very neat vertical integration.
- CRM. Satya Nadella highlighted the potential to leverage LinkedIn and Dynamics, the Microsoft CRM. It’s an addressable market worth US$315billion. Combine that with the power of the above, and you’ve got a huge revenue driver. Combine with some of the innovation below, and you’ve got something that could transform business operations.
- Messaging. Yammer was a disaster. Who uses Yammer? It cost Microsoft a tidy billion or so, and has been rolled into the Office365 product range. LinkedIn’s messaging is pretty tried and true. It’s not pretty, but it’s practical, and ranges from peer to peer, to job searches, people searches and more.
- Lynda and Slideshare. Two brands with solid reputations, that LinkedIn owns. Lynda offers leading user based training services, something that Microsoft, with its mass of products, always need to offer. And while Microsoft have the desperately uncool-but-practical Powerpoint, Slideshare connects Office365 more easily to an existing professional userbase who love to share their presentations, no matter how bad the transitions are. Powerpoint as social media? Who’d a thunk it?
- Trust. Users trust LinkedIn enough to post and search for jobs, find and extend their professional network, and basically stake their careers on it. It’s a ready made B2B and P2P collaboration and relationship management network (just change the CRM in Dynamics from Customer Relationship Management to Collaboration and Relationship Management – you read it here first! ha!)
- Content. LinkedIn boasts a lot of content. It’s got its own social news feed that’s basically a professional’s Facebook. The Microsoft Garage (their internal startup team) recognised this already when they built the Newspro app, an aggregator targeting professionals that pulls content from their LinkedIn and Facebook accounts. It’s a great app, if undercooked. And could easily fall by the wayside. It’s something I could see getting pulled into this project as a neat little technology project.
- Behaviour. Microsoft have struggled with making their MSN network as hyper-relevant and close-to-heart as the upstarts like Facebook (MSN started in 1995, 10 years before FB!). LinkedIn gives them access to communities, content and data about personalisation that could seriously boost Microsoft’s knowledge about behaviour in crazy ways. Nadella has mentioned the potential to unleash their Cortana AI onto LinkedIn.
Going back to the Vox article, this is a serious medal in Microsoft’s ambitions to be a much more service driven. If Microsoft can tie the above together, they’ve got an offering that could transform the needs of business – from hiring to networking to sharing to communicating to personalisation and suggestion. Collaboration, relationship and network management can extend from B2B to P2P seamlessly.
The timing is fantastic for Microsoft – the Surface Pro is bedding down for the long run, with fantastic sales, and rapidly becoming a weapon of choice for the mobile professional and then some, the popularity of the Hololens concepts and potential, and announcement of the evolution of Windows 10 to include Mixed Reality re-establish Microsoft as a consumer driven beast. But that’s not where the dollars are. This acquistion is a visionary feather in Nadella’s cap to solidify his reputation as a corporate leader to be respected.
After some years of missteps this sets them up for an incredibly relevant future.
Who would have thought LinkedIn could be so exciting?