Following weeks of rumors and reports, Microsoft announced officially on Monday that it had agreed to buy enterprise social networking company Yammer. The deal price is $1.2 billion.
Yammer will become part of the Microsoft Office division, although the companies said the social networking service will remain as a standalone offering as well. Current Yammer CEO and co-founder David Sacks will continue to lead the operation.
'Best in Class' Service
In a statement, Microsoft CEO Steve Ballmer said Yammer "adds a best-in-class enterprise social networking service" to his company's growing portfolio of complementary cloud services. Other cloud-based services owned by the Redmond, Wash.-based technology giant are SharePoint, Office 365, Microsoft Dynamics and Skype.
Yammer, founded four years ago, has 5 million corporate users of its service, which provides social networks to companies for collaboration and communication. However, only about 20 percent subscribe to the premium, paid service; the rest belong to the free, basic service.
The premium version includes advanced administrative and security controls, integration with enterprise apps, priority customer service, and a designated customer services manager. The companies said that employees at about 85 percent of Fortune 500 companies use Yammer, as well as about 200,000 other companies worldwide. With Yammer, employees can join workgroups and maintain constant communication on projects.
Microsoft has steadily been moving its products from desktops and in-house servers to cloud-based software. It has begun to integrate them on the cloud for consumer and business markets, such as its voice and video over Internet service, Skype, which it purchased last year for $8.5 billion. With the Yammer deal, Microsoft ups the ante of its cloud-based services competition with Salesforce, Oracle, Google, IBM and others.
'Do Something Big'
In a posting on Monday on Yammer's corporate blog, Sacks noted that, when he and co-founder Adam Pisoni started the company, they "set out to do something big." He added that, while "most people thought social networking was for kids, we had a vision for how it could change the way we work."
Now, he wrote, Microsoft's backing allows Yammer to "massively accelerate our vision to change the way work gets done with software that is built for the enterprise and loved by users."
Sacks said that the service will continue with the "same focus on simplicity, innovation, and cross platform experiences," and, over time, there will be more connections to SharePoint, Office 365, Dynamics and Skype.
Yammer is often described as a Facebook for business, and there are many connections between the two companies. Facebook's founding president, Sean Parker, is on the Yammer Board of Directors, and the company shares some of the same investors.
The acquisition had been rumored for weeks, including such leaked information as the final price tag. In fact, when Microsoft announced a major press event last week -- at which its Surface tablet was unveiled -- some observers at first expected it to be the announcement of the Yammer purchase.