Arab Today, arab today microsoft shifts to social with huge linkedin deal
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Microsoft shifts to social with huge LinkedIn deal

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Arab Today, arab today Microsoft shifts to social with huge LinkedIn deal

LinkedIn has 433 million members worldwide
Washington - Arab Today

Microsoft  on Monday shifted its focus to social networking with a massive $26.2 billion deal for professional social network LinkedIn.

With its biggest-ever acquisition and one of the largest in the tech sector, Microsoft is adding tools to connect with business as it moves further away from its roots as a pure software firm.

The acquisition aims to position the former tech sector as a Facebook-like entity oriented to business, with an array of services centered around cloud computing.

"This deal brings together the world's leading professional cloud with the world's leading professional network," Microsoft chief executive Satya Nadella said in a statement.

Nadella added that LinkedIn "has grown a fantastic business and an impressive network of more than 433 million professionals."

LinkedIn "will retain its distinct brand, culture and independence," with Jeff Weiner remaining as LinkedIn CEO, the companies said.

The firms said they had reached a "definitive" agreement that would close later this year, with the support of LinkedIn chairman and controlling shareholder Reid Hoffman.

LinkedIn, which enables members to connect with similar-minded professionals and facilitates recruiting and job hunting, has carved out a social network with a distinct identity.

But the company reported a loss of $46 million in the past quarter and a $166 million loss for 2015, which put its shares at multiyear lows early this year.

LinkedIn, which calls itself "the world's largest and most valuable professional network," has been seeking to expand its offerings with more messaging and mobile applications, and revamped its "newsfeed" to help boost engagement.

- Looking for 'magic' -

The deal reflects Microsoft's new focus on business services and cloud computing, Nadella said in an email to staff.

The tieup "is key to our bold ambition to reinvent productivity and business processes," he added.

In a conference call, he identified several ways for the firms to integrate their services.

Each company has collections of data about their users, or "graphs," that complement the other's.

Microsoft holds data such as contacts and calendars, while LinkedIn has deeper biographical and professional network information.

"If you connect these two graphs, that's when the magic starts to happen," Nadella said, adding that Microsoft can use this data with its Cortana virtual assistant and artificial intelligence.

"Imagine you're walking into a meeting and Cortana tells you about the people in that meeting because it has access to that professional network," he said.

- Clever, or too late? -

Analysts were divided about whether the deal is good for Microsoft.

Benedict Evans, a member of the Andreessen Horowitz venture capital firm who blogs about technology, said it seems to be looking toward the future.

"Very clever and oblique MSFT thinking -- how will we communicate, share & connect in a decade? Not docs + email. Social graph is key," he said in a tweet, referring to the company's Wall Street trading symbol.

Jack Gold of J. Gold Associates said LinkedIn "is highly complementary" to Microsoft services such as Skype for Business and Yammer.

The acquisition "gives Microsoft a great way to keep a pulse on what business users are doing on the web and how they may use certain tools and products," he added.

"This ability will give Microsoft lots of knowledge in what and how to deploy future products."

But Roger Kay, analyst and consultant with Endpoint Technologies Associates, said it is doubtful Microsoft can use the deal to compete in a world of social networking dominated by Facebook.

"It doesn't help at all competing with Facebook," he said. "LinkedIn is not in the same league as Facebook."

Microsoft, paying a premium of some 50 percent for LinkedIn, will probably end up writing down much of the investment.

"It seems extraordinarily expensive," Kay added. "There is no way they can extract $26 billion from LinkedIn."

Trip Chowdhry of Global Equities Research said Microsoft has not learned from a string of failed acquisitions.

Microsoft "was late to mobile" with its purchase of Nokia's phone division and "failed miserably on it," he said, adding that Skype usage "has gone in only one direction, and that is down."

"It is extremely difficult for a company to acquire insights," Chowdhry added in a research note. "LinkedIn will very likely fail in Microsoft."

SourcE: AFP

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