Saturday, 18 June 2016

Nadella Pivots

Microsoft purchase the Linkedin social network this week for $26 billion. A lot of money by anyone’s calculation. Previous misses in this space have included  Microsoft’s offer, under CEO Steve Ballmer, for Yahoo! at $40 billion. Yahoo turned it down because they thought they were worth more. Actually it looks like they were worth less!

Ballmer also purchased Skype for $8 billion and Nokia for $7.2 billion. At best you can say Skype is stagnating unable to really become the default messaging tool facing competition from iMessage, Facebook Messenger, Google Hangouts and the like. Nokia was bought to try and prevent the complete collapse of Windowsphone but ultimately the entire investment has been written off.

With LinkedIn what is the strategy here?

I think the actual answer is Satya Nadella the new CEO. Ballmer was the sales guy. Nadella is the guy from engineering and servers. Nadella sees the world from a business perspective. Nadella is focussed on the the enterprise and cloud side of Microsoft. Microsoft is moving it services to the cloud and selling them to enterprise. On premises server and software products will still exist but are complementary to the move to the cloud.

LinkedIn is a business social network. Offering services like Office 365 and Microsoft’s CRM directly to the businesses using LinkedIn makes sense. Putting together Microsoft’s services with LinkedIn Premium subscriptions could create a social network of enterprise customers globally.

Nadella’s big buy seems to be moving the vision of Microsoft from consumer client based operating systems to accessing business services provided by Microsoft.