An article published a week ago on 21 April 2016 on Street insider mentioned that Microsoft could be taking over LinkedIn. Through the grape vine I’ve also heard that SalesForce could be up for this buyout too. So what’s going on LinkedIn, why the sell out and who will be the new owner?
First let’s explore the benefits if the rumors are true and Microsoft is the winner. Microsoft’s past attempts to enter the ‘Social Enterprise’ space includes Yammar who Microsoft bought in June 2012 for $1.2 billion. Now Yammar is a popular tool for team collaboration but Wikipedia lists it as a ‘Social Media Company’. I think you’d be hard pressed to find one person to list it in their Top 10 favourite social media websites.
Even Webtrends recently (Feb 2016) listed the Top 25 social media websites and Yammar fails to get a mention. This backs up the theory that Microsoft really hasn’t entered the Social Enterprise market at all yet. But if the rumors of SalesForce being the other contender are also true why would LinkedIn go with a company that is already integrated with LinkedIn? I wonder what else SalesForce is working on and also what LinkedIn can bring to SalesForce. Maybe just the sheer size of a 433m users database is enough.
This article in Zdnet dated yesterday actually reveals that SalesForce is looking at a buyout themselves. This sheds a whole other light on the subject as surely a company that would be selling in the billions of dollars wouldn’t go with the unknown of a company in the midst of being bought out themselves. For me this isn’t smart business, so my money is on Microsoft being the main contender for LinkedIn.
So what’s in this deal for LinkedIn and what’s in it for Microsoft?
In order to answer this question properly we have to go back. Since inception, LinkedIn’s primary focus has been recruitment and HR. In fact when the company started in 2003 you could ironically upload your Microsoft Word based CV right into the interface of LinkedIn. Over time LinkedIn grew the profile fields and this was no longer an option, but LinkedIn has remained largely with the look and feel of a resume based website, at least in the personal profile area. By the end of Q4 2015 LinkedIn reported that 64% of LinkedIn’s overall revenue came from their recruitment arm.
Microsoft’s core business to date is in the business sector not recruitment. So although LinkedIn’s premium subscriptions bring in 20% of the revenue according to Q4 2015, that figure is generated by only 1.5% of its user database. I’m sure you’d agree 98.5% of subscribers still being free users are a humungous amount of untapped potential revenue.
I personally speculate that with a buyout from Microsoft a LinkedIn user will be able to open a Word document right within the LinkedIn dashboard. But my research has found this could be just the tip of the proverbial iceberg. For example LinkedIn’s current CRM system has not been widely adopted and since LinkedIn made changes (in my opinion for the worse) in 2015, more and more people have been on the lookout for a plugin that can handle their needs better. SalesForce was one such integration but it only worked for those who were willing and able to pay for it.
Microsoft owns a little known CRM system called Dynamics. The logical step in a merger is to integrate Dynamics into LinkedIn as its inbuilt CRM system and do away with this current lame duck version that should just be taken down to the back paddock and put out of its misery. This of course would then make the current integration of SalesForce harboring a competitor. If this goes ahead I bet this will see them leave LinkedIn altogether in the not too distant future.
When LinkedIn bought out Lynda.com a few years ago it was well integrated into LinkedIn and increased its user base with moderate numbers. However, many big tech writers say “it has failed to work out who it wants to be and to whom”. So although figures report a steady growth it has really failed to live up to expectations. So far!
The jury is still out as to whether LinkedIn’s focus will be to continue to create it’s main source of revenue from the HR arm or adopt the business focus that is Microsoft and finally realize the potential that LinkedIn brings in for business owners. The core strength of Microsoft’s market has largely been for business professionals and not the recruitment sector, so I have not just my fingers but also my toes crossed. If Microsoft is the winning bid this strength is sure to be brought over to LinkedIn’s untapped business potential.
Microsoft’s checkered past.
Microsoft doesn’t have a good reputation of successful acquisition so time will tell if they can turn the tables. Based on their reputation however, Microsoft does have a very logical product suite that the average user finds easy to work out the basics on their own. This is something that LinkedIn has never managed to do well. From my own experience, users have found it very unintuitive and a labyrinth of hidden buttons and passages to the treasure of LinkedIn. On one hand I can’t help but think this non-instinctual interface has kept me in a job for years helping people to navigate the platform, however if I was honest I’d much rather assist people kick butt on LinkedIn and see it as the lead generation machine that it is, rather than always be showing people the basics and explaining that LinkedIn isn’t just for uploading a CV even when you don’t want a job.
If you want to look at Microsoft’s buyout history simply click over to the 196 companies listed onWikipedia. If LinkedIn is allowed to run independently, and not just integrate Microsoft’s products but perhaps an integration of their much more intuitive user-face philosophy, this will be a hugely valuable buyout. I just hope the integration of Microsoft’s products are well thought out from a value-added point of view and not just integrated for the sake of justifying this sure to be billion dollar deal. If you think of just two major products’ that are part of a standard Office Suite, it may surprise you to realize they were both a result of company acquisitions.
That is Outlook and PowerPoint. Business owners (such as myself before this research), just took these ‘brands’ for granted as a part of Microsoft because their integration was so smooth.
What could a buyout mean to SME’s?
Hearing first hand from 100’s of my clients, (plus reading other blogs and articles over the last few months/ years), small business owners seemed to fear LinkedIn was going down the Facebook path with more personal posts and trivial updates. With the enabling of photos posted straight from your smart phone this was bound to open up more personal content and to the uneducated who didn’t see the difference between the platforms there definitely was a cross over.
I believe if this buyout happens with Microsoft, the integration of all these business or at least home office products from Microsoft firmly secures LinkedIn’s priority of staying a professional social enterprise and not a highly personal social sharing platform like Facebook.
LinkedIn has formally stated they have an “intense desire to outgrow its reputation as a jobs or career website”. If Microsoft announces a buyout of LinkedIn this will squarely show its commitment to this sentiment and I for one hope this happens.
You have just been Ninjafied by the LinkedIn Ninja Down Under.