The Predictable, Unexpected Marriage

by in Marketing

food-couple-sweet-married-largeMicrosoft’s announcement of its intent to acquire LinkedIn earlier this week appears to have caught the tech world off guard. Labeled as “largely unexpected” by Social Media today and “a surprise move” by Time, the $26.2B purchase stupefied many. Yet, despite the perceived shock of the announcement, the acquisition was actually quite predictable.

The LinkedIn acquisition wheels were first put into motion in early February 2014 when Satya Nadella succeeded Steve Ballmer as Microsoft’s CEO. Unlike his predecessor, Nadella has been adamant about positioning Microsoft at the forefront of the artificial intelligence revolution. He is focused on investing in cloud computing and machine learning technologies. Nadella’s actions since taking over the leadership throne have been harbingers of Microsoft’s decision to ink the company’s largest acquisition to date.

1. Attempting to gobble up Salesforce 

According to Gartner, the CRM market in 2015 totaled $26.3B. Of this, Salesforce controlled 20% market share, with Microsoft trailing at only 4% (also behind SAP and Oracle). With the objective to climb atop the CRM leaderboard, Microsoft has made strides to strengthen its competitive positioning. In the most arrant example, it offered to pay $55B for the Salesforce CRM gorilla in early 2015, according to CNBC (the deal purportedly fell through after Salesforce countered with as high as a $70B offer).

Ever since its hopes of acquiring the market leader fell by the wayside, Microsoft has made valiant efforts to catch up to Salesforce. In hopes of establishing a clear differentiator for its own CRM platform, Microsoft Dynamics CRM, Microsoft has focused on machine learning. The most recent 2016 release of Microsoft Dynamics, for example, included a functionality called Delve. Fueled by Microsoft’s Azure machine learning capabilities, Delve enables users to find and discover information, including documents and presentations, that are likely to be of interest to them. The LinkedIn acquisition takes this initiative 10 steps further. With the richest professional network dataset in the world, the LinkedIn platform has the potential to empower Microsoft Dynamics to surface even more relevant and comprehensive information.

2. Flirting with the idea of purchasing Slack 

Earlier this year, TechCrunch reported that Microsoft had considered an $8B bid for Slack. The deliberation was a clear signal of Microsoft’s intent to strengthen its position in the enterprise collaboration space. Microsoft’s Yammer and Skype enterprise tools have experienced paltry user adoption numbers compared to those reported by Slack (which has been credited with being the fastest-growing enterprise software of all time). Now that Slack has announced voice and video chat (enabling users to switch seamlessly from direct messaging to voice conversations), it is imposing more than ever on Skype’s territory.

The opportunity to augment Microsoft’s existing chat and conversation enterprise tools with the largest business social network in the world has high potential. It’s very conceivable that users will be able to immediately initiate phone calls directly from LinkedIn contact pages, ultimately streamlining customer outreach and prospecting initiatives.

3. Integrations with LinkedIn 

To help gage the success of a more close-knit relationship, Microsoft and LinkedIn have tested the waters on several occasions recently via integration initiatives. In June 2015, LinkedIn announced the addition of a Microsoft Dynamics CRM functionality to its Sales Navigator tool. This integration empowers users to send contact connection requests and inMail messages directly from Microsoft Dynamics CRM. As well, when a user views a profile from within Microsoft Dynamics, Sales Navigator’s TeamLink feature displays the individuals at the user’s organization who are connected to that contact. A few months later, in October 2015, LinkedIn announced that it had teamed up with Microsoft to natively integrate LinkedIn with Cortana, Microsoft’s digital assistant. Once users connect their LinkedIn account with Cortana, the digital assistant can search through their calendars and display information related to other individuals who are attending common events.

In a recent interview at the Bloomberg Technology Conference, venture capitalist, Marc Andreessen, proclaimed that Microsoft’s acquisition of LinkedIn “is a harbinger of more acquisition activity among large, wealthy tech giants – companies like Google, Amazon or Facebook – who have done well in the last few years.” It’s more than likely that acquisition announcements in the next few years won’t come out of thin air. Pay attention to small moves and you’ll likely find yourself with “insider” information that will help enable you to predict the tech world’s next big acquisition. Actions speak louder than words.

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About The Author

Rebecca Hinds
Rebecca Hinds - View more articles

Rebecca Hinds graduated from Stanford University in 2014 with a M.S. in Management Science and Engineering. In 2013, Rebecca co-founded Stratio, a semi-conductor company developing infrared sensors. The company was selected by the Kairos Society as one of the 50 most innovative student-run businesses in the world.