Why I’m disappointed that Microsoft is acquiring Yammer
So, it’s official – Microsoft is going to acquire Yammer for $1.2bn.
This is a good result for David Sacks but I am a little disappointed. Here’s why.
I am a believer in the freemium pricing model – I think it makes sense to enable people to try-before-they-buy to see if they really will get the value promised by a website. However, if you want to “go-large” and really build an on-line business of scale with freemium, you need deep pockets and a cash-burn runway measured in years.
Yammer had raised more than $142 million from venture firms and the free-forever pricing plan where companies only pay if they want to claim their Yammer Network. I therefore saw Yammer as the ultimate experiment in the Enterprise SaaS market. If anyone could prove that freemium could build a profitable business, it was them.
However, having been through a Microsoft acquisition I question whether Microsoft would wish to continue with this model. Their DNA when selling to businesses is focussed around Enterprise Client-Access-Licenses (CALs), so I am not sure how the freemium piece fits in.
If additional revenue is no object to Microsoft, part of me wonders whether they should just make Yammer a feature of the CAL, included at no extra cost. This would at least position them to keep out competitors like SalesForce Chatter.
However, that is what is disappointing as it would effectively kill the freemium model experiment just as it looked like it was getting going.
One to watch, then.