Microsoft announced plans to acquire LinkedIn for $26.2bn (£18.4bn) this week, claiming that the acquisition of the social media platform will help accelerate growth of its Office 365 and Dynamics solutions. Social is one of the key trends dominating the industry at the minute, along with cloud, big data and mobile. The deal, which ranks among the biggest tech acquisitions of all time, is the latest in a line of Microsoft purchases in this space, having bought Skype in 2011 for $8.5bn and Yammer a year later for $1.2bn.
LinkedIn was launched in 2003, six months after its founders thought up the idea. The firm admits growth was initially slow, with just 20 sign-ups a day on some early days, but today, it boasts more than 433 million members. That figure means Microsoft coughed up a whopping $60.5 per LinkedIn user, representing the high premium it puts on the site.
Analyst Quocirca's founder Clive Longbottom told CRN that he found the price "slightly high", and said Microsoft will have to work hard to get its money's worth.
"The only way Microsoft is going to get any pay back is to say they are going to use LinkedIn across everything," he said. "So embedding it into the Office 365 environment and embedding it into Dynamics [is important]."
Both products are significant to Microsoft, and its partners, and have been in recent years as it has pushed more and more towards the cloud. In its recent Q3 results, detailing performance for the three months to 31 March 2016, Microsoft announced Office 365 revenue grew 63 per cent in constant currency. Meanwhile, over the same period, Dynamics products and cloud services grew nine per cent in constant currency, and Dynamics CRM Online seats more than doubled annually.
Longbottom added that LinkedIn could bolster these units even further.
"When somebody is working within Dynamics CRM, they will be able to pull in more information about a person from their LinkedIn profile if that person has opted in," he said.
But he cautioned that despite LinkedIn boasting a huge amount of users, quantity does not always equate to quality.
"People's LinkedIn profiles aren't all that trustable," he said. "I could go in and change mine to say I have 400 years' experience of running global companies, and there is nothing there to check it. The data consistency and reliability is close to zero. Microsoft is going to have to do something about that before it can start saying it adds value to CRM and other environments."
Cloud services such as Office 365 are being pushed heavily by Microsoft, and have been for a number of years. Microsoft has been keen to encourage partners to not only sell cloud services, but to ensure customers are actually using them, increasing sales incentives to boost the latter.
Microsoft partner ComputerWorld's managing director John Armstrong, said the addition of LinkedIn to the Microsoft portfolio might help in that area, branding it "a great opportunity to sell more".
"I can see it driving more companies to want to work with Office and cloud-based applications, because you will have to ability to set up real-time feeds from LinkedIn. I think it will give partners an advantage and help drive opportunity."
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