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Microsoft Puts Money Down on Web 2.0 Trend

While the Facebook deal got all the attention, two smaller partnerships to bring offerings from pure play Web 2.0 vendors to Microsoft SharePoint might be the biggest news yet of things to come.

By C.G. Lynch

October 26, 2007 — CIO — Microsoft’s agreement to purchase 1 percent of Facebook for $240 million might go way beyond the immediate need to compete more heavily with Google in the online advertising space. Analysts say the deal, coupled with two quieter announcements that Microsoft plans to help two online application vendors integrate their wares into Microsoft’s Sharepoint platform for online collaboration, shows the technology giant believes Web 2.0-inspired technologies are here to stay.

On the surface, the deal fills Microsoft’s need to land a small fraction of Facebook so it can increase its share of advertising on the rapidly growing Facebook platform, which has about 30 million members. Back in August, Facebook and Microsoft announced a partnership by which Microsoft would help bring relevant advertising to Facebook users. In this context, Microsoft’s latest investment in Facebook solidifies a relationship between the two companies while also grabbing online advertising real estate that its rival Google would like to get.

Analysts point out that the deal could be the start of something even bigger. They say if Microsoft and Facebook can collaborate on advertising, there’s no reason to believe they couldn’t incorporate a Facebook-like application into SharePoint, Microsoft’s portal-based server that allows companies to manage shared documents and run collaborative technologies such as a blog or a wiki. The future result could be more robust Web 2.0 offerings that corporate IT departments offer under the comfort and familiarity of a Microsoft environment.

“Right now, the Facebook deal is really motivated by the consumer and marketing side of things, and to really get [Microsoft’s] ad platform up and running” in the social network space, says Oliver Young, an analyst at Forrester who researches Web 2.0 technologies in the enterprise. “But if that relationship goes well and continues to deepen, I think we could see some cross-pollination between Facebook and SharePoint.”

Young’s assessment can be backed up by two announcements this week that flew under the radar because of the Facebook announcement. At the Web 2.0 summit in San Francisco this week, Microsoft announced that it would help Atlassian, a provider of enterprise-grade wikis, and NewsGator, a popular RSS tool, integrate their applications with SharePoint. For Microsoft, the announcements show they’re willing to incorporate best-of-breed Web 2.0 technologies rather than only provide their own applications atop the SharePoint server, which Young says have been adequate but not exceptional.

 

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