With LinkedIn, Microsoft looks to get back to the heart of the enterprise
"I can see plenty of ways how LinkedIn can help Microsoft fulfill its promise to increase productivity and streamline business processes," said Dan Olds, an analyst with The Gabriel Consulting Group. "I've always felt that LinkedIn was an overlooked social network that has an amazing potential for business use. Microsoft sees this too and, if they execute correctly, should see a great return on their hefty investment."
Olds added that with one fell swoop, this move could vault Microsoft into the top ranks of global social networks.
"This is a hugely bold move for Microsoft," he said.
News hit early Monday morning that Microsoft is looking to drop nearly $26.2 billion in cash to acquire LinkedIn, a business-focused social networking service.
The acquisition will be the largest in Microsoft's history.
In an email to employees today, Microsoft CEO Satya Nadella called the purchase key to the company's "bold ambition" to reinvent productivity and business processes.
"Think about it: How people find jobs, build skills, sell, market and get work done and ultimately find success requires a connected professional world," Nadella wrote in the email, made public on Microsoft's site. "It requires a vibrant network that brings together a professional's information in LinkedIn's public network with the information in Office 365 and Dynamics. This combination will make it possible for new experiences, such as a LinkedIn newsfeed that serves up articles based on the project you are working on and Office suggesting an expert to connect with via LinkedIn to help with a task you're trying to complete."
With more than 433 million members in 200 countries, LinkedIn is the self-proclaimed largest professional social network in the world.
Judith Hurwitz, an analyst with Hurwitz & Associates, said the acquisition is meant to bring Microsoft back to the center of the enterprise, where it held reign for decades.
"It is definitely an expensive move," she said. "Microsoft wants to use LinkedIn in conjunction with Office365, especially, to create a unified environment for building business linkages. For customers who are very Microsoft centric, it could be potentially very effective... I think Microsoft wants to return to a model where they control the entire customer experience. It is an ambitious play."
Rob Enderle, an analyst with the Enderle Group, said that for Microsoft, operating LinkedIn could go beyond having a social networking entity.
"It is part of a comprehensive strategy to focus back on users and line managers and position against new competitors," he said.
What will this mean for LinkedIn's millions of professional users is, at this point, unclear.
Microsoft has said LinkedIn will continue to operate as a separate entity.
If that is the case, LinkedIn users shouldn't see much change to their profiles or relationships.
However, for Microsoft users, they're likely to see LinkedIn integrated into their business apps.
"I expect Microsoft will integrate LinkedIn into Windows, unless regulators block it," said Jeff Kagan, an independent industry analyst. "This would be a natural process."
Olds agreed that he doesn't see any major impact on LinkedIn users "in the short or even medium term," he said. "I don't see Microsoft doing much of anything to interfere with a model that's currently working well. We might see some advertising sneaking its way into the product in various places, plus more and different membership options as well, but no sweeping changes."
Olds also noted that he doesn't see LinkedIn users being freaked out that Microsoft will soon have access to all of their information and professional contacts.
"I don't think Microsoft is seen as the same evil company they might have seemed like back in the 1990's," he said. "All Microsoft really wants to do is sell software and a little bit of advertising -- not rule the world, a la Google. I don't think that most users will have a problem with Microsoft having the kind of personal information they'd post on LinkedIn."