Eye on Microsoft

About this Blog: This is Shane O'Neill's blog about Microsoft's corporate strategy and its various software and services — the good, the bad and the ugly.

Eye on Microsoft

Is Yammer More Appealing Under Microsoft Ownership?

Revenues for social networking site Yammer have been surging since Microsoft bought the company last summer and is sure to increase as Yammer gets woven into Sharepoint Online and Office 365.

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It wasn't out of line to think that Microsoft lost its marbles when it paid $1.2 billion for enterprise social networking site, Yammer, in July of 2012. Did the company really need to pay that much for social media and collaboration features that could be, or already are, baked into Sharepoint?

From the other angle, Yammer could have fallen victim to the Microsoft stigma (In case you hadn't heard, not everyone loves the Redmond software giant). However, Yammer has been on a hot streak ever since the acquisition, at least according to the company's sales figures.

Yammer's sales for the full 2012 year nearly tripled year-over-year (to roughly $60 million in revenue, according to analyst estimates) and 2012 fourth quarter sales quadrupled year-over-year. Yammer has also surpassed 7 million registered users and the number of paying customers increased 165 percent in 2012, according to the company. That number can only go up now that Yammer will be integrated into Microsoft volume pricing and products like Sharepoint and Office 365.

Yammer

Yammer has a few price models. Its "Basic Network" plan is free and is the one that individuals and very small businesses use. It provides standard features including activity streams for discussions and content posting, polls, groups for team collaboration, and access to mobile versions of Yammer for all the mobile platforms, among other features.

The free version also includes Group Admin features such as the ability to moderate content and control group access and membership.

The paid version offers more advanced security and administration controls and costs $3 per user per month. Before Microsoft bought Yammer, the company charged $15 per user per month for this version. So clearly Yammer is seeing enough of an increase in paid business customers since the acquisition to feel comfortable lowering the price significantly.

"We are making up for that revenue in volume," said David Sacks, Yammer's co-founder and current corporate vice president in Microsoft's Office division, in a Bloomberg Businessweek story. The Businessweek story also noted that Yammer has more than 7 million people using its service and is able to convert about 20 percent of them to the paid version.

Yammer's price points will get more interesting, and more appealing to enterprises, later this week when Microsoft makes Yammer available with Sharepoint Online for $4 per user per month and also as part of the whole Office 365 suite for $8 per user per month.

The new $4 and $8 plans will be available for Microsoft EA (enterprise agreement) customers via volume pricing starting March 1.

What do you think? Are social networking services like Yammer becoming mission critical within your business? If you're an enterprise do you feel reassured that Yammer is now owned by a veteran enterprise provider like Microsoft?


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