29 January 2020 21:34

MARKETING

Biggest B2B brand Microsoft buys biggest B2B social network

Microsoft is acquiring LinkedIn in a $26.2 billion cash deal, the largest in the company’s forty year history. The deal brings together the biggest B2B brand with the largest B2B social networking site (appearing at 3rd and 85th respectively in this year’s BrandZ Top 100 Most Valuable Global Brands) , boasting more than 400 million members globally. Could this be the pivotal step that positions Microsoft to stay relevant for the next forty years?

Traditionally a behemoth composed of a fragmented set of products and services, of late Microsoft has simplified its approach and focused on ’empowerment‘ as the reason it exists. If Apple is going to help people express themselves, then Microsoft is going to help them get stuff done. While its installed Windows base remains huge, Microsoft is pushing forward with its cloud strategy. The shift to the cloud is a must-win battle because as consumer preferences shift toward mobile devices, further erosion to Microsoft's core Windows business seems unavoidable.

Under CEO Satya Nadella, Microsoft has upped its game, but the acquisition of LinkedIn takes it to a whole new level. Microsoft has been successful with Enterprise in the B2B space which accounts for over 50 percent of the company’s total revenue, and is more profitable than the consumer business thanks to strong market share across Mac OS, Office, cloud and database. Nadella is clearly betting that LinkedIn will help move the company away from its installed software base and toward a company that empowers virtual business processes of all sorts.

However, it is an expensive bet. According to the New York Times Dealbook, Microsoft is paying $220 for each of LinkedIn’s monthly active users, and notes that Facebook only paid $40 per user when it acquired WhatsApp for $19 billion two years ago. Will it pay off? If Microsoft can leverage the acquisition to gain an intimate understanding of how teams and individuals operate and apply that knowledge to build customized solutions then the answer is likely yes.

From LinkedIn’s perspective, the deal means getting support from the most valuable brand in B2B (as identified by work undertaken by Millward Brown in partnership with LinkedIn). It could also mean potentially integrating more robust Microsoft systems such as Skype and Office365 into the LinkedIn platform thus making their offer more universal. As my colleague Ben Marshall suggests, it is not beyond the bounds of possibility that one day we will log into Skype for Business and send emails from our LinkedIn accounts.

One thing that both LinkedIn and Microsoft must address, however, is the issue of data privacy. With the potential integration of two of the largest databases of B2B data, there are bound to be concerns from users of both platforms as to how their personal data will be used by the other. So what do you think of Microsoft’s move? Does it help set the company up for the next forty years? Please share your thoughts.

 

Written by Nigel Hollis,Executive Vice President and Chief Global Analyst at Millward Brown

Read 822 times Last modified on Friday, 17 June 2016 04:10
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