Microsoft May Be Buying Yammer This Week for Over $1 Billion

The rumor mill started turning last night as various sources, including Bloomberg, reported that Microsoft is in talks to buy social CRM provider Yammer. We have been longtime fans of the service, which gives enterprises easy access to social media features to connect employees with one another. Yammer succeeds where other social CRM products tend to overcomplicate – the basic Yammer product is pretty much your company’s own private Twitter. So what’s Microsoft interest in the product?

The most likely use of Yammer is to enhance Microsoft’s business services. While most people associate Microsoft with its Windows and Office suites, they in fact have a thriving corporate solutions division that attempts to empower businesses of all size to use technology to their advantage. In addition to server software, desktop software and customized business consulting, they also offer products to help enterprises connect with their team and manage projects. Microsoft Project, for example, is a powerful tool that deigns to help PMs take their ideas from concept to completion.

Yammer would be a great service offering for various businesses – especially mid-sized ones that likely don’t have their own employee relationship software. If the deal goes through, Microsoft would be able to offer those companies a “Private Social Network for Your Company,” as Yammer bills itself. That’s a pretty sweet option and would be a great way to open up a dialogue for other MS services – and help MS ward off Oracle and Salesforce, who are competing for the same business.

This is all a best case scenario, though. Microsoft is a large corporation and when they purchased Skype, eight executives left within the first few months. That said, it looks like Skype is running healthily under the new management, with ads supposed to bring in a lot of revenue. How will Yammer, a more fickle product that relies on keen insight into the user experience, handle new management? We’ll have to see.

The deal is rumored to be worth more than $1 Billion, and could be reached by Friday. We’ll keep you posted.