Posted by pyantus on Tue, Jun 06, 2012 @ 02:27 pm

What were a few isolated rumors burst into a full blown media explosion Friday when a couple of Yammer employees were overheard discussing Microsoft’s acquisition of their company. For those of us close to the space, the first thought was “is this is going to kill NewsGator?”

Those living outside of the enterprise software world might not be overly familiar with NewsGator. Social tends to bring to mind the likes of Facebook, Twitter, and LinkedIn. However, the leaders in social platforms for the enterprise are a different group of vendors including Jive, Google, Yammer, and Microsoft SharePoint.

Last fall’s Information Week study found that over 70% of all social initiatives in the enterprise during 2011 were done on SharePoint. They went on to project that this trend will continue as we move into 2012, with no other vendor even close to the market share of SharePoint. So if Microsoft SharePoint is already the dominant social platform in the enterprise, why would Microsoft need to acquire Yammer?

One thought is that Yammer will fill a gap for SharePoint. Very few SharePoint social initiatives are successful without a third party playing a significant role. Virtually every analyst report in the last two years states that third party solutions are required to make SharePoint a viable enterprise social platform. However, these reports usually focus on NewsGator as an example of such a solution–and over the last several years, NewsGator has become the leading solution for those organizations wishing to do a social initiative with SharePoint.

Before news broke on Friday, Yammer, Jive, and Google were SharePoint’s biggest competitors in the enterprise. But SharePoint was dominating with its NewsGator partnership. Last year at Microsoft’s Worldwide Partner Conference in LA Steve Balmer even showed a sold out Staples Center crowd a demonstration of NewsGator as part of his keynote address.

So, if Microsoft wanted to acquire a social complement to SharePoint, why not just acquire NewsGator? Perhaps the Yammer acquisition is compelling for other reasons.

The first and most obvious is Microsoft Dynamics which needs a face-off to SalesForce Chatter and Oracle’s recent acquisition of Virtue. Microsoft has invested a great deal of money positioning Dynamics as a viable CRM for the SMB space. They need to close the social gap if they expect to remain competitive in that space.

Another reason for the acquisition could be to use Yammer as a replacement for OfficeTalk. The goal of OfficeTalk was to put Micro-blogging within Office applications, to provide an interactive conversation capability that enhanced the co-authoring experience. Yet, OfficeTalk has all but disappeared from Microsoft’s dialog over the last six to nine months.  Yammer could offer a better solution for OfficeTalk.

Microsoft might also see Yammer as an independent play, like Skype. When the Skype acquisition happened, the media asked similar questions about how Skype would fit with Lync (formerly Office Communication Services). Thus far Microsoft has been perfectly content to let Skype operate on its own in the consumer space. Other than some integration work it doesn’t appear to be replacing anything in Lync.

Yammer is very similar to the Skype acquisition. For the most part Yammer has operated outside of the control of enterprise IT. Yammer’s initial play was to capture enterprise users with a freemium offering, and then convince the enterprise to bring Yammer in-house for security reasons. Initial Yammer communities were all based around one domain or company. Now Yammer is enabling community managers to invite people from outside the company. Microsoft might see the market opportunity to have a consumer social platform focused at the enterprise.

Of course as long as Microsoft remains silent we’re left with speculation. Even when they start talking, if Microsoft is as circumspect as usual, we’ll be left with speculation.

The best scenario, though, for leveraging Yammer is to go the Skype route. That way, Microsoft doesn’t hobble the product. It takes full advantage of the Yammer brand. And it leverages Yammer’s strengths to expand Microsoft’s market with a consumer-facing product that’s still tied to Microsoft’s enterprise stronghold.

It also lets Microsoft keep the stronger NewsGator product as the solution for internal, enterprise users of Microsoft SharePoint.  NewsGator and Microsoft SharePoint have been a winning combination—one that Yammer can’t replace without considerable rework. That’s why acquiring Yammer doesn’t necessarily mean displacing the NewGator relationship.

For now, our bet is on the consumer/enterprise play for Microsoft’s Yammer acquisition, and a continued NewsGator/Microsoft SharePoint offering for inside the enterprise.