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Marriage of Microsoft & LinkedIn: fusion of data, intelligent automation and applications

Analysts: Sheryl Kingstone, Scott Denne, Donnie Berkholz, Ian Hughes, Brenon Daly

On June 13, Microsoft announced plans to acquire LinkedIn for $26 billion. While the list of potential revenue synergies is long, there are three key themes that can be leveraged for future differentiation:

- Data and cloud: Even with a low estimate of one-quarter of LinkedIn's monthly active users, Microsoft can now create a social graph with interests, professional network, company size, etc.
- Intelligent automation: Cognitive and self-learning systems – as well as the data that drives them – are playing an increasing role in the evolution of business applications.
- Enterprise applications: A platform, and not just a destination, that leverages LinkedIn's data to not only augment several of Microsoft's business applications, but an entire app ecosystem.

The 451 Take

The fact that LinkedIn provides a wealth of business profiles makes it attractive to B2B advertisers. Microsoft needs to create a new onboarding experience to enable marketing and advertisers to reach decision-makers. Integrating the data into a variety of Microsoft products, once those are tied to a LinkedIn identity, could create a phenomenal B2B targeting opportunity. It would also provide Microsoft with the ability to drive additional cloud revenue. Microsoft's Azure ML will also provide several options for providing contextual guidance on the data, as well as embedding intelligence into Cortana, Dynamics and Office. The more data to plug into a machine-learning environment, the more accurate the outcome, such as correlating people's backgrounds, interests and abilities to intelligently recommend insight based on hundreds of different data points. It makes the future combination potentially incredibly powerful. Microsoft/LinkedIn must create a platform that embeds the right information at the right time for the right processes to change the dynamics of the business applications market. The future of LinkedIn's API is still unknown; the question remains: Does Microsoft enable an app developer ecosystem around it, or cripple it to enable a competitive advantage?

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Deal Analysis: Microsoft connects with LinkedIn with $26bn acquisition

Analysts: Scott Denne, Sheryl Kingstone

No longer able to rely on the dominance of Windows to guarantee its position in enterprise software, Microsoft makes the largest ever acquisition of an internet company with its purchase of LinkedIn – bumping Facebook's $19bn purchase of WhatsApp from the top slot. Microsoft aims to integrate LinkedIn's member identities and depth of data across its suite of productivity and business-process applications, providing it with a differentiator to sustain its market position.

The 451 Take

CEO Satya Nadella has taken strides to make Microsoft a 'mobile first, cloud first' company in his two-plus years heading the software giant. The acquisition of LinkedIn marks his most substantial move yet, and not just in terms of the price tag. Many cloud software offerings from major enterprise software companies are little more than hosted versions of legacy products. By integrating LinkedIn, Microsoft will bring potential features, functionality and benefits to its software that take advantage of the shared infrastructure and connectivity that are unique to cloud offerings, and enable Microsoft's products to benefit from LinkedIn's network effects, which will make it challenging for competitors to match.

Read the full Deal Analysis here! 
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