Yammer allows members of business groups to interact with other users on their team through an activity stream. In a announcing the deal, officials from the companies say Yammer has 5 million corporate users, including employees at 85% of Fortune 500 companies that use either a base-level free edition or a paid version with additional functionality.

MORE:

Jim Lundy, an analyst at Aragon Research, says he's seen "viral" adoption of Yammer in recent months by enterprise customers. Yammer's proven ability to convert free users into paying customers, he says, was one thing that likely attracted Microsoft to the Silicon Valley company. Overall the move is evidence of a shift by the legacy technology giants like Microsoft to embrace the cloud world, he says. Yammer being a cloud-based service will give Microsoft some ability to connect in with its as well, Lundy suggested.

"It's a new day, and a different era in computing and Microsoft needs some wins," Lundy says. "If they're smart, they'll realize that the Redmond way is not the way of the whole world and they'll leverage some of what's going on in Silicon Valley."