Why Microsoft Could Challenge Salesforce for CRM Market Share After Buying LinkedIn

MSFT shifts gears

When Microsoft bought LinkedIn today for $26.2 billion, it essentially married the two biggest names in curriculum vitae. Professionals nowadays generally type up resumes on Microsoft Word and update their professional credentials on LinkedIn, after all.

But if you want to really understand the merger, industry players say, get your head in the cloud—think data, in general, and zero in on Salesforce, specifically. 

"I think this creates a real professional cloud competitor to Salesforce at scale," said Undertone co-founder Eric Franchi.

Julie Langley, partner with London-based mergers-and-acquisitions consultancy Results International, agreed and expanded on the idea.

"LinkedIn is one of the best new business sales tools in the world of [business-to-business] and in many ways competes head on with Salesforce," Langley said. "When Microsoft integrates LinkedIn with its [customer relationship management] suite … what you have is a hugely powerful tool that is truly differentiated and one that poses a real threat to Salesforce."

The theory makes sense when you consider that Microsoft reportedly attempted to purchase Salesforce last year for $55 billion but couldn't get the deal done. 

And, it's true that LinkedIn software capabilities are on the uptick and represent a serious business. Its marketing solutions revenue jumped 29 percent last quarter to $154 million, helping the company increase total sales by 35 percent to $881 million. And the platform is growing—it has roughly 433 million users, up from about 300 million in 2014. 

"This deal is primarily driven by the rich set of data LinkedIn brings to the table on careers, business and employment," said Noah Mallin, head of social at MEC North America. "Integrated with Microsoft's existing suite of work tools it helps to potentially beat back competition from upstarts like Slack amongst others."

Seth Solomons, North America CEO of direct marketing agency Wunderman, said bringing the two companies together puts Microscoft "beyond what was the evil empire" and represents a continuation of its shift from software company to major online business.

"As Microsoft transforms their brand—and I think [Microsoft CEO Satya Nadella] has done a pretty amazing job getting Microsoft into considerations it hadn't been in a long time—as that brand gets more relevant, LinkedIn will become a key component in that sort of brand refresh, brand evolution," Solomons said.

Redmond, Wash.-based Microsoft is likely not buying LinkedIn for its advertising business—as some industry players are wondering—but to pair it with its existing products such as Outlook, Skype and its Siri competitor, Cortana, said Kyle Bunch, head of social media at R/GA.

"I think the biggest takeaway, honestly, is that we may look back in a year or two and see this as an important moment when we kind of shift away from just thinking about social networks and think more about the kind of platform-data graph, data model that a lot of these platforms have," Bunch said.

But what about the $26.2 billion cost? 

"It certainly is a big price tag," said Katie Townsley, vp and executive director of social at agency MXM. She added, "But one of the best things about LinkedIn is the data it has on its members. I imagine that Microsoft is looking to leverage all of that data for more professional integrations of content and functionality into its products."

@Chris_Heine Christopher Heine is a New York-based editor and writer.
@martyswant martin.swant@adweek.com Marty Swant is a former technology staff writer for Adweek.
Publish date: June 13, 2016 https://dev.adweek.com/digital/why-microsoft-could-challenge-salesforce-crm-market-share-after-buying-linkedin-171961/ © 2020 Adweek, LLC. - All Rights Reserved and NOT FOR REPRINT