Ecosystem view based on investment styles
Providing a perspective on this ecosystem must be seen in the context of a number of limitations. Business ecosystems are formed based on basic connections between human and organizational relationships. Some of these relationships are physical and others are inferred for example, an organization employs a CEO, CFO, etc and operates primarily at a location and sells a number of products and services to a defined market. Other relationships include sub-organizations, funding and venture related interactions.
Investment styles vary widely, but they all have venture activity and seed funding projects. The ecosystem is tightly integrated with competitive forces creating tight boundaries across services and products offered. If Microsoft wants to get access to the wider Salesforce market, it needed to find the primary data play and enable the core products across their platforms.
Microsoft market performance
Microsoft had a rocky few years under Balmer, but Satya’s focus brought it back on track. He took over the reigns in 2014 and started acquiring key organizations to bolster the core future focus of Microsoft as a key digital player in the cloud.
LinkedIn’s acquisition might not have made sense initially, but the competitive ecosystem showed that primary data is a key competitive force. Google, Apple, etc all focused on owning primary client data and leveraged is across their products. Salesforce already had well developed models as their dominance continued.
Competitive graph approach
The result is an overlapping graph that enables multiple services beyond CRM with primary data. But, not just any data – LinkedIn is the most widely used business network available today. Google’s knowledge graph, Facebook’s social graph and LinkedIn’s economic graph have all created an entirely new way of looking at the world. It’s not that network theory is new, but that these companies have socialized the use of network data across many different constructs. Google has both primary data and links to the world’s knowledge, Facebook has the same and LinkedIn captured a key portion of the incredibly important world.
Looking at all inferences across the ecosystem, it became clear that LinkedIn was a lone player amongst many dominant multi-service strategic technology companies. To further explore and exploit the value created by the vast LinkedIn network it needed to move into a different competitive category. This move will create market pressures where Salesforce and Microsoft ended up fighting over LinkedIn.
The combination of the new Microsoft strategy and the ability to compete with other big players like Amazon AWS and Google Cloud will propel them into a new competitive space.