LinkedIn Helping Microsoft Pull Ahead of Its SaaS Rivals

Snapping up LinkedIn last year appears to be paying off for Microsoft as it conquers the SaaS market, according to Synergy Research

LinkedIn Microsoft Synergy

Microsoft ruled the software-as-a-service (SaaS) market during the second quarter of 2017, Synergy Research Group reported in its latest enterprise applications market survey.

In 2016, the Redmond, Wash. software and cloud services provider embarked on one of the biggest tech acquisitions of the year by snapping up LinkedIn, the massive career-oriented social network, for $26 billion. The software giant was banking on LinkedIn's rich repository of business and employee data to help enrich its own cloud-enabled business software portfolio, which includes Office 365 and Dynamics 365.

Less than a year later, the gamble is already paying off.

"Helped by the LinkedIn acquisition, Microsoft further distanced itself from the chasing pack of SaaS providers," said John Dinsdale, chief analyst and research director at Synergy Research Group, in email remarks to eWEEK. "Long-time market leader Salesforce was overtaken by Microsoft a year ago but remains the number two player. These two are followed by Adobe, Oracle and SAP. The fastest growing major SaaS providers are Oracle, Microsoft and Google."

SaaS providers produced nearly $15 billion in revenue during the 2017 second quarter, a year-on-year increase of 31 percent. Synergy Research expects annual SaaS revenues to double within the next three years, said Dinsdale.

In July, Microsoft reported upbeat fourth-quarter fiscal 2017 results highlighting its success in getting enterprises to place their IT and application workloads on its cloud. Beating Wall Street estimates, the company generated $24.7 billion in revenue and 98 cents in earnings per share. Financial analysts had expected sales of $24.27 billion and 71 cents earnings per share.

Its Azure cloud computing platform along with its ever-expanding SaaS portfolio played a big part in surpassing those expectations.

"Our commercial cloud annualized revenue run rate now exceeds $18.9 billion," said Microsoft CEO Satya Nadella during a July 20 earnings call. "This quarter's cloud growth puts us squarely on track to reach the goal we set a little over two years ago, of $20 billion in commercial cloud [annual run rate] in fiscal 2018."

LinkedIn, meanwhile, continues to make its presence felt across Microsoft's software ecosystem.

This summer, during the Inspire conference in Washington D.C., the company launched Microsoft Relationship Sales, a bundle that includes its cloud-based Dynamics 365 for Sales solution and LinkedIn Sales Navigator. Intended to promote deeper customer engagement, the product "brings together disparate data across CRM, social networks, and productivity systems, such as Office 365 and LinkedIn so sellers can finally make sense of the data they already have and unify the sales experience around relationships," said Alysa Taylor, general manager of Global Marketing for the Cloud and Enterprise Business Applications and Industry at Microsoft, in a July 10 announcement.

Beyond the SaaS realm, LinkedIn has also beefed up its messaging capabilities. Betting that its users want to spend less time in an email client and more time trading messages on its web and mobile apps, LinkedIn rolled out new, easy-to-use messaging capabilities in April. In July, LinkedIn released a Windows 10 app that delivers updates directly to Action Center, the operating system's notification hub.

Pedro Hernandez

Pedro Hernandez

Pedro Hernandez is a contributor to eWEEK and the IT Business Edge Network, the network for technology professionals. Previously, he served as a managing editor for the Internet.com network of...