Microsoft’s $US26B purchase of LinkedIn provides access to a “Treasure Trove of Information” according to Gartner analyst Doug Laney.

“It’s all about the data!” he writes in analysing the deal.

“It’s no surprise when any cash-laden company today makes an information play. This is in line with IBM acquiring The Weather Co last year and Facebook acquiring WhatsApp the year before. Not that this is a copycat move, but Microsoft clearly realizes it’s a bit late to the information products party.

“Sure it has the languishing and relatively unknown Azure Data Marketplace, but not access to a massive and continually fed set of global market, employment, and industry topic content. And while I’m not sure what degree of monetizable content Microsoft pulls from Bing searches, it’s certainly a fraction of the search and Gmail data Google has in its content coffers.

“What makes the most sense about this announcement is the untapped value of all that content, including “social graph” the linkages and insights. The biggest challenge likely will be whether Microsoft is or can be positioned quickly enough to monetize all this content. Information monetization requires all the same mechanisms and processes as monetizing any kind of asset. But the rewards can be far greater due to some of the unique characteristics of content: Compared to other kinds of assets, information assets offer the benefits of non-depletability, low creation costs (especially when users are creating content for free, i.e., every social media company), low inventory costs, low distribution costs, low repackaging costs, and scant regulations (especially in the US). And this content directly feeds other monetizable assets – apps that rely on collaboration around contact, which will be facilitated and extended within and beyond the enterprises Microsoft serves.

“Sure, Microsoft is trying to overcome a couple of stumbles with social media, and sure there may be some mutually leveragable technologies and analytics from the combined companies. Examples already suggested by Microsoft and LinkedIn made it clear they are already thinking about application-level linkages. And while this will take time to execute upon, both companies have the requisite skills to do so.

But that’s not at all what this deal is about. Did we mention already? It’s all about the data.

“$26.2 billion sure sounds like a hefty sum–a marathon stretch of cash to be precise. But (with an estimated 433 million worldwide users)  is $US60.51 per user excessive? Sounds like a good deal, especially when compared to the value investors placed on each Facebook user ($80.95) and each Twitter user ($101.70) at their last liquidity events. Ostensibly, most LinkedIn users publish less content, hence the “discount”.

“Thus far, LinkedIn reports it has generated revenue from this content in just three ways: talent solutions (65% of revenue), marketing solutions (18% of revenue), and premium subscriptions (17% of revenue). Imagine the other ways Microsoft could monetize this content outside the limited HR space, up to and including giving data brokers like Dun & Bradstreet a run for its money. The business insights buried LinkedIn data are like no other.“

The full analysis is available HERE.