July 01, 2013, 7:55 AM — For a product once described as Twitter with a business model, Yammer is becoming more nuanced, morphing into an important feature set that will cross over among Microsoft applications. Just as important, it continues seeing growth and popularity among businesses, where it can act as a hook that can encourage current Microsoft customers to upgrade and adopt Microsoft cloud services.
BACKGROUND:Why Microsoft spent $1.2B on Yammer
Microsoft says registered Yammer users have increased from about 5 million a year ago to nearly 8 million today. That includes people who use the software for free, but Microsoft says paid network users have more than tripled year over year. It didn't say how many paid customers Yammer has. "The numbers exceed my expectations," says Jim Lundy, an analyst at Aragon Research.
These customers are an important part of why Microsoft shelled out such a hefty sum for the startup, Lundy said at the time of the deal. At least some workers at 85% of the Fortune 500 use Yammer, Microsoft says, and that's a foot in the door for promoting upgrades of Microsoft products such as SharePoint - that are integrated with the platform, Lundy says. "It's an easy up-sell for existing SharePoint customers," he says.
That's because many end users find it simpler to use than the native SharePoint Activity Feed, which has similar functionality. Microsoft is working on single sign-on for Yammer and SharePoint, and the capability to replace the SharePoint news feed with Yammer, the company says.
Yammer has a broad range of features that include posting messages, creating groups and sharing group content with outsiders via instant messaging. It also supports a file repository for groups to store and fetch important content, and these files can be attached to Yammer messages. Hashtags on posts aid in searching for specific topics.
Now Microsoft is also promising to expand Yammer's reach into other areas, including better interoperability with email. It says it will also improve the sharing within Yammer of documents created in Office 365, which includes online versions of Office, SharePoint, Lync and Exchange as well as Word, Excel, PowerPoint and OneNote delivered from Microsoft's Azure cloud.
A Yammer application is imminent for SharePoint that will embed Yammer group feeds into SharePoint sites created using either the SharePoint Online service or the on-premise server version of SharePoint 2013.
Microsoft says it is betting that businesses will embrace social networking for communication, coordination and collaboration as workers come to rely on similar platforms in their personal lives and that is why it is so heavily invested in Yammer. "[W]e're committed to making it the underlying social layer for all our products," says Andy O'Donald, an Office 365 technical product manager in a blog.
To push adoption along, Yammer is free to any individual employee. The hope is that users of the free software will find a business benefit to it that will prompt companies to buy advanced features.
Lundy says the software overlaps some with SharePoint features, but ease of use and ease of administration make it more attractive. Lundy says he can set one up in half an hour and he's not an admin.
The company has also been aggressive in its pricing, slashing per month costs for a user from about $15 to about $3, putting pressure on its competitors that include Jive, VMware Socialcast, SAP StreamWork and others that charge $18 to $23, he says.
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