In a world where the mobile devices we use aren’t Microsoft’s and the PC is in decline, B2B services are where Microsoft is going to find its next major source of revenue.
Microsoft Doubles Down on B2B With LinkedIn Acquisition
This article is based on an episode of the B2B Market Research Podcast. The audio version is also available here.
For this reason, Microsoft’s $26.2 billion purchase of LinkedIn was a really smart move.
Microsoft can now leverage LinkedIn’s vast user data and strategic integration with their products in order to corner the B2B market.
First, let’s consider the incredible professional data Microsoft now has access to.
- LinkedIn currently has a network of 433 million users.
- About a quarter of LinkedIn’s users are in the US.
- Two new members join LinkedIn every second.
- In the first quarter of 2016, there were 45 billion page views on the site.
Consider the power of this user data. Never mind the potential to sell it, take a minute to imagine what the analytics dashboard looks like on LinkedIn’s back end. What can they decipher about employee growth across industries? What can they tell about the types of companies that are growing today and their hiring practices? What types of jobs are getting the most engagement on LinkedIn? There are some pretty fascinating things that I imagine LinkedIn’s leadership has been able to look at over the years, and now Microsoft gets direct access to that.
In addition to all of these benefits, Microsoft gets the org chart for the entire world. Microsoft can leverage that knowledge to support sales and marketing efforts for their own products. Sure, the org chart has some gaps, but it’s still an exceptionally powerful asset. It’s certainly a better org chart then Microsoft could develop organically before having access to LinkedIn’s data.
This acquisition changes the customer relationship management (CRM) market in a lot of ways. Organizations that produce CRM solutions have long tried to integrate LinkedIn data in interesting ways, but LinkedIn hasn’t always made this easy.
It’s likely that LinkedIn integration obstacles for Microsoft’s CRM solution, Dynamics CRM, will disappear. CRM competitors such as Salesforce, Oracle, SAP, and SugarCRM probably won’t get the same treatment.
I predict we’ll see Microsoft extend their relationship with LinkedIn through integration with SharePoint. For example, when you’re on a SharePoint portal, perhaps you’ll be able to see all of your co-workers’ professional history, their skills, and academic background.
In addition, Microsoft may finally get LinkedIn integration with Outlook done right. Microsoft has dabbled in this area in the past with the Outlook Social Connector and various levels of integration they’ve offered with different Outlook releases. Again, LinkedIn has historically made this type of integration difficult for third parties. Now that Microsoft is no longer a third party, LinkedIn integration with Microsoft products will probably run a lot smoother. That’s good news for Outlook.
Bot integration is also a likely development. Microsoft is making a big push with bots. Integrating LinkedIn data with those bots could be seismic. This may show up as Cortana integration with Windows, Advanced Analytic Services, etc.
In addition, Microsoft is going to get another brand that can be used to protect and buffer their own image. Much as they do with Xbox and Skype, LinkedIn is going to be left to stand alone as its own brand.
I also suspect LinkedIn won’t have to focus quite so much on rapid revenue growth. Of course, they still need to make money for Microsoft, but the fact that they’re now rolled up under all of Microsoft’s assets is going to make it easier for LinkedIn to focus their efforts on doing one or two things exceptionally well.
This may lead to Microsoft toning down LinkedIn’s recruiter-focused business, even though it generates a lot of revenue for LinkedIn. Instead, Microsoft may choose to emphasize providing data and insights on users who leverage the platform. In this way, they could share information with sales and marketing teams from a variety of companies in a bid to foster engagement. They may choose to do something similar to what Facebook does today with the insights it provides users about company pages on their platform. Whether this will lead to users becoming more reluctant to share their information remains to be seen.
Microsoft may also make some pretty significant changes to the way LinkedIn structures their pricing. As it stands now, LinkedIn doesn’t allow small and medium businesses to purchase access to their platform in bulk, with small license packs of 10, 20, or even 50 users. Given that Microsoft’s bread and butter has always been a lot of small and medium businesses alongside their enterprise business, there could be big changes ahead for LinkedIn’s pricing model.
I think that Microsoft’s acquisition of LinkedIn was a great move. I’m looking forward to exciting integrations and am hopeful that LinkedIn will remain a platform with enough incentive for users to continue to volunteer information on their professional histories.
With the LinkedIn acquisition, Microsoft is making a big, $26.2 billion bet. With those billions, Microsoft has sent a clear signal that doubling down on B2B is the plan.
What do I think they should do next? I think they should go buy Slack, but we’ll see if that happens.
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Image courtesy of Jérôme Rommé/ Fotolia.