Microsoft announced it was acquiring business social network giant LinkedIn and the Street took that as positive for LinkedIn and negative for Microsoft. There are a lot of ways of looking at the deal, including that Microsoft like Verizon wants a piece of the OTT and advertising-sponsored service market. It seems more likely that there’s more direct symbiosis, particularly if you read Microsoft’s own release on the deal.
LinkedIn, which I post on pretty much every day, is a good site for business prospecting, collaboration, and communication. It’s not perfect, as many who like me have tried to run groups on it, but it’s certainly the winner in terms of engagement opportunity. There are a lot of useful exchanges on LinkedIn, and it borders on being a B2B collaboration site without too much of the personal-social dimension that makes sites like Facebook frustrating to many who have purely business interests.
Microsoft has been trying to get into social networking for a long time, and rival Google has as well, with the latter launching its own Google+ platform to compete with Facebook. There have been recent rumors that Google will scrap the whole thing as a disappointment, or perhaps reframe the service more along LinkedIn lines, and that might be a starting point in understanding Microsoft’s motives.
Google’s Docs offerings have created cloud-hosted competition for Microsoft, competition that could intensify if Google were to build in strong collaborative tools. Google also has cloud computing in something more like PaaS than IaaS form, and that competes with Microsoft’s Azure cloud. It’s illuminating, then, that Microsoft’s release on the deal says “Together we can accelerate the growth of LinkedIn, as well as Microsoft Office 365 and Dynamics as we seek to empower every person and organization on the planet.”
Microsoft’s Office franchise is critical to the company, perhaps as much as Windows is. Over time, like other software companies, Microsoft has been working to evolve Office to a subscription model and to integrate it more with cloud computing. The business version of Office 365 can be used with hosted exchange and SharePoint services. Many people, me included, believe that Microsoft would like to tie Office not only to its cloud storage service (OneDrive) but also to its Azure cloud computing platform.
Microsoft Dynamics is a somewhat venerable CRM/ERP business suite that’s been sold through resellers, and over the years Microsoft has been slow to upgrade the software and quick to let its resellers and developers customize and expand it, to the point where direct customers for Dynamics are fairly rare. There have also been rumors that Microsoft would like to marry Dynamics to Azure and create a SaaS version of the applications. These would still be sold through and enhanced by resellers and developers, targeting primarily the SMB space but also in some cases competing with Salesforce.
Seen in this light, a LinkedIn deal could be two things at once. One is a way of making sure Google doesn’t buy the property, creating a major headache for Microsoft’s cloud-and-collaboration plans, and the other is a way to cement all these somewhat diverse trends into a nice attractive unified package. LinkedIn could be driven “in-company” as a tool for business collaboration, and Microsoft’s products could then tie to it. It could also be expanded with Microsoft products to be a B2B platform, rivaling Salesforce in scope and integrating and enhancing Microsoft’s Azure.
Achieving all this wondrous stuff would have been easier a couple years ago, frankly. The LinkedIn community is going to be very sensitive to crude attempts to shill Microsoft products by linking them with LinkedIn features. Such a move could reinvigorate Google+ and give it a specific mission in the business space, or justify Google’s simply branding a similar platform for business. However, there is no question that there is value in adding in real-time collaboration, calling using Skype, and other Microsoft capabilities.
The thing that I think will be the most interesting and perhaps decisive element of the deal is how Microsoft plays Dynamics. We have never had a software application set that was designed for developers and resellers to enhance and was then migrated to be essentially hybrid-cloud hosted. Remember that Azure mirrors Microsoft’s Windows Server platform tools, so what integrates with it could easily integrate with both sides of a hybrid cloud and migrate seamlessly between the two. Microsoft could make Dynamics into a poster child for why Azure is a good cloud platform, in face.
Office in general, and Office 365 in particular, also offer some interesting opportunities. Obviously Outlook and Skype have been increasingly cloud-integrated, and you can see how those capabilities could be exploited in LinkedIn to enhance group postings and extend groups to represent private collaborative enclaves. Already new versions of Office will let you send a link to a OneDrive file instead of actually attaching it, and convey edit rights as needed to the recipient.
So why doesn’t the Street like this for Microsoft, to the point where the company’s bond rating is now subject to review? It’s a heck of a lot of cash to put out, but more than that is the fact that Microsoft doesn’t have exactly an impressive record with acquisitions. This kind of deal is delicate not only for what it could do to hurt LinkedIn, but what it could do to hurt Microsoft. Do this wrong and you tarnish Office, Azure, and Dynamics and that would be a total disaster.
The smart move for Microsoft would be to add in-company extensions to LinkedIn and then extend the extensions to B2B carefully. That way, the details of the integration would be worked out before any visible changes to LinkedIn, and it’s reasonable to assume that B2B collaboration is going to evolve from in-company collaboration because it could first extend to close business partners and move on to clients, etc.
From a technology perspective this could be interesting too. Integrating a bunch of tools into a collaborative platform seems almost tailor-made for microservices. Microsoft has been a supporter of that approach for some time, and its documentation on microservices in both Azure and its developer program is very strong. However, collaboration is an example of a place where just saying “microservices” isn’t enough. Some microservices are going to be highly integrated with a given task, and thus things you’d probably want to run almost locally to the user, while others are more rarely accessed and could be centralized. The distribution could change from user to user, which seems to demand an architecture that can instantiate a service depending on usage without requiring that the developer worry about that as an issue. That could favor a PaaS-hybrid cloud like that of Microsoft.
This is also a pretty darn good model of what a “new service” might look like, what NFV and SDN should be aiming to support. Network operators who are looking at platforms for new revenue have to frame their search around some feasible services that can drive user spending before they worry too much about platforms. This deal might help do that.
Perhaps the most significant theme here is productivity enhancement, though. We have always depended as an industry on developments that allow tech to drive a leap forward in productivity. That’s what has created the IT spending waves of the past, and what has been lacking in the market since 2001. Could this be a way of getting it all back? Darn straight, if it works, and we’ll just have to wait to see what Microsoft does next.