LINKEDIN ACQUISITION. Microsoft looking for new source of revenue

By acquiring LinkedIn, Microsoft is looking at further strengthening its business from corporates in India and social networking play, an area in which it lags behind Facebook.

Analysts feel that Microsoft’s Productivity and Business Processes as one of the three segments that could get a shot in the arm with the LinkedIn buy. “If you look at it, Microsoft gets access to LinkedIn’s database of enterprise users,” said Sanchit Vir Gogia, founder of Greyhound Research.

Currently, LinkedIn has over 400 million users globally and 35 million users in India. Also, India is the second fastest growing market after China, which would give a strong fillip to Microsoft’s businesses in India, in line with its global ones. The Redmond-based major counts companies such as HDFC, Narayana Health, Snapdeal and Meru among its customers in India.

It can bring its brand and offerings closer to professionals connected via LinkedIn through social networking which is bound to translate to additional sales revenues in the years to come, said Sanjoy Sen, Doctoral Research Scholar, Aston Business School in the UK. The productivity and business process segment contains revenues from Microsoft’s Dynamics and Office suite of products.

While that is one part of the puzzle, another piece that the Redmond-based major has been trying to put together has to do with a stronger social network play. “LinkedIn will help Microsoft get a toehold into the digital lives of consumers. Microsoft’s products are mostly utilitarian and hence are not entrenched in the lives of a consumer when compared to say WhatsApp, Instagram, Facebook, YouTube, Snapchat and Gmail,” said Raghuraj Sunder Raju, Founder of start-up HealthPlix Technologies

Also, industry watchers opine that with the changing PC environment coupled with the fact that Microsoft has given out free upgrades to Windows 10 (which has 300 million users), the company is on the look out for a new source of revenue. This new revenue stream can also come from more aggressive plays in markets like India, in terms of ad dollars.

“Ad dollars from LinkedIn can be another revenue source,” said Gogia, adding that Microsoft may even be looking to acquire mobile ad companies like InMobi.

(With inputs from Rajesh Kurup in Mumbai)