After all the rumors, Microsoft did confirm that it will buy Yammer, a cloud based social service company, for $1.2 billion. Microsoft says it will integrate Yammer into the Microsoft Office division, as it joins the Sharepoint in the product line. Although Yammer will be integrated with Sharepoint, the company said the Yammer will also be available on its own as a standalone service. Kurt DelBene, president of the Microsoft Office Division, describe Yammer as “best in class enterprise social networking” and that the folks at Yammer are providing "rapid innovation in the cloud”. Yammer‘s business model is based on a “freemium” social service where individuals can easily collaborate with individuals that share the same business domain. For those who find this collaboration to be useful, they extend their capabilities with an upgrade to one of the paid service options.

The Yammer sales model appealed to Microsoft CEO Steve Ballmer, who said that Yammer is "really unique, maybe very unique in the viral adoption model. You can throw the words 'enterprise' and 'social' on a bunch of different stuff, but you can't find anybody [else] that has really built a customer base of enterprise IT customers, virally--with great respect from the IT department and with great love from the customers. I think Yammer is very unique in that.” Yammer brings technology as well as customers to Microsoft. It includes end users that like the free Yammer productive tool, but it also brings enterprise customers that Yammer has acquired through viral adoption. "We're very excited about the social feeds and capabilities of Yammer and very committed to continuing it as a standalone business," DelBene stated. Although it did not emphasize it, it logical to assume that Microsoft will also pursue building synergy with Microsoft Office and Office 365.

Related Links:

http://www.informationweek.com/thebrainyard/news/social_networking_private_platforms/240002667

http://www.networkworld.com/news/2012/062512-microsoft-yammer-260466.html?hpg1=bn