Microsoft brings LinkedIn into the fold

The technology company’s latest acquisition has broad implications for several of its business lines

Tags: LinkedInMicrosoft CorporationMicrosoft DynamicsSocial MediaUSA
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Microsoft brings LinkedIn into the fold Megha Kumar, senior research manager for software and enterprise solutions at IDC Middle East, Turkey and Africa.
By  Alexander Sophoclis Pieri Published  June 20, 2016

In a surprise move, the Microsoft Corporation announced the acquisition of business-orientated social network LinkedIn.

Revealed publicly on the 13 June, 2016, as part of an all-cash transaction valued at $26.2bn, the acquisition holds numerous implications for several of Microsoft's business lines. In particular, the company's Office product range, and its enterprise applications under the Dynamic brand, stand to capitalise on the deal.

The latest announcement joins a slew of recent acquisitions undertaken by Microsoft in the last few years, which includes acquiring Skype in 2011, Yammer in 2012, and Nokia in 2014. Boasting 443 million members across 220 countries and territories, LinkedIn introduces a ‘corporate-to-consumer' connection to the company's arsenal that has been highly sought with previous acquisitions, as well as its Xbox gaming platform.

Insights shared by global market intelligence firm IDC highlighted that Microsoft, like its fellow competitors in the market, is aggressively seeking new avenues for revenue growth. Microsoft itself has an added challenge of addressing a declining operating systems business, which has traditionally been a key contributor for the company.

Commenting on the implications for the Middle East, IDC's Megha Kumar pointed out that the acquisition will likely introduce a number of products and services catered specifically to the region.

"Firstly, it allows Microsoft to provide customers with an entire social business stack, since it will allow them to address the needs of end-user customers and employees as well," explains the senior research manager for software and enterprise solutions at IDC Middle East, Turkey and Africa.

"The second most common use of social business engagement in ME highlighted by CIOs in the region has been around improving employee collaboration and engagement."

The acquisition of LinkedIn holds great promise for Microsoft's Dynamics product family, which comprises of its enterprise resource planning and CRM applications. The company's entry into the ERM market dates back to the early-2000s with the purchase of both Great Plains and NavisionDamgaard. Microsoft's home-grown CRM offering was later bolstered with the acquisition of MarketingPilot in 2012.

According to IDC, Microsoft's Dynamics business was valued at $3bn in 2015, and was projected to receive a relatively low organic growth year-over-year. Additionally, the business line was reshuffled under the Cloud & Enterprise team in early-2015.

Now, the reorganisation, together with the acquisition of LinkedIn, a cloud focused strategy in CRM, as well as the launch of cloud versions of ERM products, Microsoft will likely aim to transform this business line to become more competitive against the likes of SAP, Salesforce and Oracle.

In the immediacy, LinkedIn is expected to impact Microsoft's human capital resources (HRM) products, considering that roughly 60% of its revenue stems from HRM services. Additionally, the incorporation of data from the business social network will likely prove beneficial to both the sales and marketing automation components of Microsoft Dynamics CRM.

Sales personnel will be able to identify leads from following prospects on the business social network, while marketing can blend first party data and LinkedIn data to provide lookalike audiences.

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