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"[LinkedIn] users have been loyal because there is a switching cost," says Jonathan Yarmis, a VP and analyst with AMR Research. "For someone to go and duplicate what they're doing, and even if they came up with a superior platform tomorrow, they wouldn't necessarily switch because they've built their business network. In many ways, the connections can be worth more than the platform."
Of particular interest to analysts and social media followers this week was the investment by SAP Ventures. SAP's investment in the site could signal that the old guard technology vendor is thinking of ways to make its software products more social and leverage the huge base of business contacts in LinkedIn.
As an example, customer relationship management (CRM) software, a staple SAP product, allows salespeople to track their customers and keep tabs on their transactions with the company. But most CRM applications suffer the problem of not helping salespeople connect with new customers, forcing them to seek them out in traditional means or (worse) cold calling.
Since LinkedIn allows someone to connect with another user by getting introduced through a mutual connection, tying such a function into CRM software would be immensely valuable for salespeople, AMR Research's Yarmis says.
"If they could expose that data and provide context for sales people, that would be huge," he says.
Jeremiah Owyang, a senior analyst with Forrester Research, believes LinkedIn could get involved in the Enterprise 2.0 space — the market of software vendors who take Web 2.0 technologies such as blogs, wikis and social networks and makes them palatable for business use.
"Already, LinkedIn looks more like a corporate intranet homepage rather than a networking site for finding your next job," he says. "LinkedIn is ripe to make a play for the Enterprise 2.0 space by acquiring a community platform vendor, or developing features for the enterprise."
Despite the injection of capital LinkedIn has received, the service will walk a tightrope with users if it decides to explore these types of revenue streams. A user, for instance, might not be thrilled to learn that salespeople are digging around their resumes and looking to pitch them products through a mutual connection.
"There is a risk that users go 'whoa, that is not what I signed up for,'" Yarmis says. "There is a risk of backlash."
Facebook provided a cautionary tale with its Beacon Advertising fiasco, when it began broadcasting the buying activities of its users to their friends without seeking their permission. It caused the company to backpedal in the form of an apology from Zuckerberg. Facebook also offered users the ability to opt-out from social ads.
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