Microsoft was ardent in what it called the “world’s leading professional cloud” merging with the “world’s leading professional network”. Microsoft CEO Satya Nadella bagged his first big purchase by banking in LinkedIn. The work-focused social network is used by about 43 million users worldwide and was acquired in an all-cash transaction for $26.2 billion by Microsoft. LinkedIn will continue to maintain its brand independence, but will now report to Nadella. Let us understand this acquirement better.
Why Microsoft wanted to buy LinkedIn
LinkedIn is a rapidly expanding professional network that has gained unmatched popularity. The social network has been bought by Microsoft for a per share value of $196, summing up to a $26.2 billion cash transaction. The reason behind Microsoft’s heavy investment in acquiring LinkedIn can be related to multiple factors like:
- LinkedIn’s growth rate of 19% per year totaling to 43 billion users worldwide.
- 105 million unique visitors each month with a 9% year over year growth.
- 101 percent growth rate with 7 million active job listings.
- 45 billion quarterly member page views and 60 percent mobile usage.
- LinkedIn’s treasure chest full of meaningful user data, which is unparalleled and powerful.
- Enterprising for Microsoft will be easier with the resources that LinkedIn holds.
Other Social networks that have been acquired by companies
In the past, many companies have purchased other networks as strategic business moves. The list includes the purchase of Tumblr by Yahoo, Vine acquired by Twitter and the famous $19 billion dollarpurchase of Whatsapp by Facebook. The best examples of companies purchasing other business ventures in networking are the thoughtful acquisition of Instagram by Facebook at $1 billion and the $1.65 billion transactions to cash-in YouTube by Google.
How Microsoft plans on using LinkedIn
To a number of business analysts, the Microsoft overtaking LinkedIn news is bigger than it seems. When compared to Google in terms of total business deals, this acquisition gives Microsoft an edge that Google may find difficult to counter.
- Going Mobile
While giants such as Google and Facebook have investments in social networking and are major shareholders in the industry, Microsoft had till date lacked a mobile network. While LinkedIn holds a great promise in its long-term mobile usage, Microsoft’s lack of abilities in the field can drive users off. It will be fundamental to the success of both companies to focus intensely on the mobile dimension for the professional network. It will not take time for users to move on if the mobile ecosystem gets outdated.
- Mobile ads network
While LinkedIn places Microsoft at a level with Facebook and Google in the social networking arena, the Windows maker is still short to none in their ads networking department. Google and Facebook are both seeing tremendous growth credited to their social ads networking, and Microsoft is quietly standing empty handed in a corner. To utilize the power of LinkedIn, Microsoft will need another purchase in the near future.
- Selling enterprise applications via LinkedIn
Research analyst, Scott Denne believes that this monopoly will be used by Microsoft to sell its applications to professionals in the business. He also claims that this shift will be a slow process, to avoid scaring the members off. Because Windows products are not the rage they were once, Microsoft will be leveraging LinkedIn’s viewership and data collection to power business sales and marketing of its enterprise applications.
When LinkedIn acquired Lynda, they were aiming to create a single destination for professional growth and learning. Microsoft will be using this new acquisition as a tool to sell its enterprise applications. It will also use Lynda to promote learning about Microsoft’s networking tools, all-in-all promoting sales.
By the end of this calendar year, LinkedIn will rest in Microsoft’s pocket. A pricey but much-needed achievement for the Windows makers, this new deal is expected to help Microsoft in jumping back into the market and crossing over from mere software makers to social networking giants.