For over a week Microsoft was rumored to be acquiring Yammer and yesterday the official announcement of the agreement arrived. The company founded by Bill Gates will pay $1.2 billion in cash, twice Yammer’s estimated value.
Yammer is a startup founded in September 2008 offering a microblogging service. Over time, it’s become a provider of social network services for companies with over 5 million verified business users including employees of more than 85% of Fortune 500 companies.
In a time when social networks are fighting with hundreds of millions of users, Yammer’s 5 millions may seem few but Yammer was never intended to compete with Facebook. The business services offering is a different world where the important thing isn’t having billions of users but the ones with more money to spend.
Yammer offers services with the freemium formula: you can have a series of free basic services but there are also some premium services for a fee. Depending on the users needs, you can choose between different options for different subscription costs. Only 20% of users, however, use some kind of Yammer premium account.
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Microsoft has stated that Yammer will keep on being developed as a standalone service with the current CEO David Sacks to direct the work but it will be integrated in the Division Office 365, where it will be adopted alongside other Microsoft services such as SharePoint, Dynamics and Skype.
Already a couple of years ago, Microsoft started experimenting a service called OfficeTalk, which now seems to have disappeared from OfficeLabs, the laboratory for the tests of Microsoft internal projects. Apparently, Microsoft decided to follow its historical policy of buying existing projects can then be adapted to the company’s needs.
Yammer also includes cloud services, an element that currently is very trendy. For Microsoft CEO Steve Ballmer this is one of the keys to this acquisition to compete first of all with Salesforce.com service Chatter, which offers a similar service, but also with other startups. The long-term plan, however, is to compete with Google, which is increasing its corporate market.
