Microsoft Comes Out Of Its Shell: Steve Ballmer's Social Legacy
Social is one of the big tech trends Microsoft has largely missed out on under CEO Steve Ballmer, who just announced his retirement. That's not for lack of trying; things just haven't always worked out. Most glaringly, its home-grown social network SoCl, which it opened to the public last December, hasn't yet shown much sign of attracting a critical mass, even among the younger demographic to which it's geared.
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Ballmer has been at the helm since 2000, during which time Microsoft has made numerous, if somewhat disjointed, efforts to bootstrap itself into the age of the social network. Ballmer oversaw Microsoft's 2007 investment in Facebook, a social-acquisition spree that's included big players like Skype and Yammer, and the integrated social features into the company's staple game console Xbox.
But it's hard to say how all those efforts add up to anything you might call a real strategy. So let's take a look at the pieces Microsoft has been trying to put together—the very ones that Ballmer's successor will have to try to forge into a coherent whole.
When Microsoft bought Skype in May 2011 for $8.56 billion, it was the biggest purchase ever for the company. Although Microsoft already had its own messaging service in Windows Messenger Live, Skype allowed users to call and message others who weren't on Skype themselves. And the video and chat messaging service was so reliable and useful that users were willing to pay for it.
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So, obviously, was Microsoft. The company has since integrated Skype into many of its products, including Windows Phone 8, Windows 8.1, and the Xbox One. It finally closed down Windows Messenger Live earlier this year in favor of Skype.
Skype might still be a small player as a standalone service, but it's grown substantially under Microsoft's tutelage, and is now essentially the company's answer to Apple’s popular iMessage. That said, it's hard to say how much effect it's had outside of helping Microsoft maintain parity with its mobile rivals; Windows Phone phones continue to struggle in the market against iOS and Android.
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Since Microsoft purchased Yammer just over a year ago, the enterprise social network has been on a tear. Its user base has grown by 55 percent, activity has doubled, and paid networks have grown over 200 percent. Microsoft has also tightly integrated Yammer into products such as the collaboration software Sharepoint Online and the online version of its productivity suite, Office 365.
It would be nice to think that by bringing in startups like Yammer, Microsoft could assimilate their fast-paced, innovative ways into its own culture. There's relatively little evidence of that so far, but Yammer founder David Sacks is still at Microsoft as VP of the Office division. He might even be a dark-horse candidate for the CEO job.
In 2007, Microsoft invested $240 million in the then-fledgling Facebook, after a previously effort to buy Facebook outright for $15 billion flopped. Still, the two companies have been fast partners ever since.
A year later, Facebook had integrated Microsoft search—then called Microsoft Live Search, now better known as its Bing search engine—into its platform. That deal has evolved several times, most recently with a January deal that locked in Bing as the backup engine in Facebook's social Graph Search.
Similarly, in 2011, Facebook and Skype teamed up to bring free video chatting between users on Facebook. It was a mutually beneficial arrangement giving Facebook access to a killer video service and Microsoft a piece of the world’s largest social network.
What Comes Next
While many of Microsoft's social partnerships and acquisitions seem to have worked out reasonably well, it's not at all clear how they add up to a larger social strategy for the software giant. That's going to be a major challenge for the man or woman who steps into Steve Ballmer's shoes sometime over the next year.