Microsoft/LinkedIn deal shows content is king

Discussion
Left to right: Jeff Weiner, LinkedIn; Satya Nadella, Microsoft; Reid Hoffman, LinkedIn - Photo: Microsoft
Jun 14, 2016
George Anderson

Hopes are high in the c-suites of Microsoft and LinkedIn following the announcement the tech giant has signed a definitive agreement to acquire the social media network for $26.2 billion.

In a memo to internal staff (via The Verge), Microsoft CEO Satya Nadella suggested that LinkedIn will one day provide users of Office 365 and Dynamics with access to content and experts that will help them improve results on projects and, over time, at an organizational level.

The connection between the two companies is expected to lead to increased growth and advertising opportunities for LinkedIn while enhancing the value of Microsoft’s cloud-based suite of apps.

Mr. Nadella expressed confidence that similar cultures at Microsoft and LinkedIn would play a significant role in the success of the companies going forward. LinkedIn will remain independent, with Jeff Weiner remaining as CEO.

“This approach is designed to keep the LinkedIn team focused on driving results while simultaneously partnering on product integration plans with the Office 365 and Dynamics teams,” wrote Mr. Nadella. “During the integration, we’ll pick key projects where we can go deep together that will ultimately result in new experiences for customers.”

DISCUSSION QUESTIONS: Do you see LinkedIn as a good fit for Microsoft and vice versa? What are the implications for retail industry businesses that use Office 365 and Dynamics? How might you see this affecting your use of LinkedIn and Microsoft products?

Braintrust
"Microsoft has cash to burn, and I don’t know how they arrived at their valuation, but it seems like a steep price to pay. "
"What will it mean to retailers? Wait and see, but I bet it will be — to borrow a phrase from the current political cycle — “huge.”"
"Other than Microsoft collecting one more digital trading card, I’m not terribly enthusiastic about this transaction."

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12 Comments on "Microsoft/LinkedIn deal shows content is king"

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Ken Lonyai
BrainTrust

Ho hum. There’s definitely some benefits to Microsoft having access to such a vast group of professionals in order to promote Office, but most of them are probably users of their products already. From another perspective, the purchase might indicate that Microsoft is concerned about Google Docs making inroads into their client base and this is a way for them to fight back. Unfortunately, I don’t see Microsoft as offering much inspiration (especially after dropping a wad of cash) for LinkedIn to fix the myriad of shortcomings the platform has.

Dick Seesel
BrainTrust

Microsoft has cash to burn, and I don’t know how they arrived at their valuation, but it seems like a steep price to pay. Will LinkedIn users really want the site to turn into a platform for promoting Office, cloud services, etc.? Will Microsoft find itself in the position of News Corp. (overpaying for Myspace) if a better social networking model for business comes along?

Despite my skepticism, it will be interesting to watch for similar acquisitions of targeted online services as the giants of the tech business (Google, Apple, Facebook, Microsoft and Amazon) compete to broaden their portfolios.

Kim Garretson
BrainTrust

I agree with Ken Lonyai. Many users, myself included, have started calling LinkedIn “LockedOut” as it has regularly scrubbed features from free or low-paying clients, like searching your own connections. Perhaps this anti-user, slow/no innovation attitude at LinkedIn will change with this deal, as its parent helps shift the business model away from subscriptions and advertising-that-rarely-works to more of a data focus, and a focus on synergies with Microsoft.

Does B2B e-commerce have a play with Microsoft Cloud in the future, especially after the Salesforce/Demandware deal, and will the data within LinkedIn be a way to bolster B2B e-commerce? Maybe.

Mohamed Amer
BrainTrust

I’ll take the other side of the trade on this one. Microsoft got a great deal with the announced purchase of LinkedIn and brings back a missing growth narrative for the brand. The company can now get firmly into social and boost its strategic arc to the cloud. Seamlessly integrating Office 365 and LinkedIn will not only improve the business user experience but will also add a personal and company-level productivity bump.

LinkedIn gets the deep pockets of Microsoft and not having to cater to a financial market’s quarterly expectations. It’ll be worth watching how the LinkedIn team operates within Microsoft over the next one-to-two years. Integrations of large acquisitions are never easy.

Bottom line, this is good news for both companies and demonstrates that in the digital age sustained brand differentiation begins with combining great content and a highly-connected social networking platform.

Shep Hyken
BrainTrust

If Microsoft wants to be a serious player in the CRM world, then the acquisition of LinkedIn could be just what they need to get some traction. Office 365 is a popular product, but their Dynamics product hasn’t had the same success. This could take it to another level, when you can harness the data of LinkedIn with a good CRM system. I’m looking forward to seeing how this plays out.

Ryan Mathews
BrainTrust
First, let’s look at Satya Nadella’s strategic vision for Microsoft — a vision built on networks and the cloud. If we keep this focus the LinkedIn deal is a natural, if perhaps more than a little pricey. From the LinkedIn perspective the deal was great, especially since the company relied heavily, perhaps too heavily, on stock options to keep the party going. Now, will the acquisition boost the use of Office 365 and Dynamics? I don’t think that’s the real question. Sure, you have to tell the analysts something, but there is a much larger and, at least as of now, far more amorphous point here. Nadella is simply putting Microsoft’s money where his mouth has been, placing a fairly substantial bet that his vision of the company’s future is the right one. There may be no long-term sustainable strategic advantage in hardware or even software, per se, but there is tremendous advantage in networks and tightly controlling data storage and retrieval. Viewed from this perspective, the LinkedIn deal may be the most important deal… Read more »
Doug Garnett
BrainTrust

Other than Microsoft collecting one more digital trading card, I’m not terribly enthusiastic about this transaction. In part, look at that internal release. Classic Microsoft. By buying LinkedIn they get access to a massive database of people who trust their information with LinkedIn. But the release doesn’t honor any of that. For LinkedIn to continue to have value to Microsoft, they need those loyal users to continue to use it and to add more. By not acknowledging this, Microsoft makes me suspicious that in a couple years, LinkedIn will really cease to exist.

But time will tell whether Microsoft has bought something that will build into even more value or whether they’ve done another Nokia transaction which leaves both companies weaker.

Brian Numainville
BrainTrust

Hard to say where this will end up. One positive for LinkedIn is that there is a substantially larger company backing them now and, if properly leveraged, this could improve offerings for both companies. But some of that depends on whether one uses Office 365 or Dynamics … if not, there may not be much benefit.

Craig Sundstrom
Guest

Good fit? Well they both have something to do with computers….

Whether or not one feels this makes sense has lot to do with how one views the purpose of LinkedIn. If it’s seen simply as a networking tool for execs — and exec-wannabes — then I don’t see a lot of point beyond simply having early access to MS technology (I think it’s well enough known already that not much additional exposure will be gained). OTOH, if it’s seen as a platform to push MS products, then the latter has gained audience … and the pushing will likely make the site less attractive to users.

Ben Ball
BrainTrust

There has been a lot of discussion about using the LinkedIn database to promote Office and other Microsoft products to users. But perhaps the more powerful play is the reverse. Integrating LinkedIn into the Office database. Adding the business software equivalent of the “phone a friend” option from “Who Wants To Be A Millionaire.” Expand that to include a cloud based, confidential discussion board that only includes your contacts — but makes the experience seamless with the task at hand rather than a distinctly different step. For example, your network includes a group of Excel super-users. You set them up as a subgroup that automatically sees your “what the heck is that?!?!?” query when some unknown Excel error message pops up.

Value-added? I think so.

Kai Clarke
BrainTrust

Buying LinkedIn was an overpriced attempt to strengthen MS’s cloud presence. Yes, the future is the cloud. But it doesn’t have to cost $26 billion. Whatever happened to “build it here”? Acquiring companies to gain a greater presence usually doesn’t come up successfully … for Microsoft….

Charles Whiteman
Guest

I don’t think this deal shows content is king as much as it shows that the “user community is king.” Microsoft could’ve replicated LinkedIn’s content (& software for that matter) for far less than $26 billion. What they couldn’t replicate is LinkedIn’s 433 million members who frequent the platform and keep their profiles updated. That said, it’s not clear to me how Microsoft will monetize this asset in a way that will one day make this look like a wise investment.

wpDiscuz
Braintrust
"Microsoft has cash to burn, and I don’t know how they arrived at their valuation, but it seems like a steep price to pay. "
"What will it mean to retailers? Wait and see, but I bet it will be — to borrow a phrase from the current political cycle — “huge.”"
"Other than Microsoft collecting one more digital trading card, I’m not terribly enthusiastic about this transaction."

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