Microsoft acquiring LinkedIn might seem like a crazy idea at first: Why would an enterprise software company pay $26.2 billion for a professional social network? The two business don't appear to have much in common at all.

But Microsoft Corp. (Nasdaq: MSFT) and LinkedIn Corp. are companies in transition. Microsoft is well under way making the transformation from software to the cloud, while LinkedIn wants to be about more than "friending" and headhunting -- it wants to leverage the cloud to become the world's best resource for career advancement, sales and recruitment. The two companies are betting they can achieve those goals together.

The combination of Microsoft and LinkedIn is a marriage that brings baggage to the altar. LinkedIn boasts more than 433 million members worldwide but has yet to convert scale into profits. And Microsoft, meanwhile, is scrambling to convert its dwindling legacy on-premises enterprise software business to the cloud. (See Microsoft Nabs LinkedIn for $26.2B.)

Microsoft wants LinkedIn's enormous wealth of information about individuals' current jobs, work history and professional relationships -- information that you and I have input into our LinkedIn profiles -- along with LinkedIn's rich company profiles. Microsoft wants to integrate that information into its Office 365 cloud productivity suite as well as its Dynamics CRM application. Microsoft also values LinkedIn's Lynda cloud-based education and training service, which LinkedIn acquired for $1.5 billion early last year. Much of the Lynda curriculum is devoted to helping IT staff get professional training on Microsoft products and services.

For LinkedIn's part: In an open letter to employees announcing the sale Monday, LinkedIn CEO Jeff Weiner describes his vision for the social network. He wants LinkedIn to be the destination where companies find their next employee, workers find their next job, and get training for that position. LinkedIn also wants to enable sales.

But more than that: LinkedIn looks to "connect the world's professionals to make them more productive and successful, and ... create economic opportunity for every member of the global workforce," Weiner says.

As revealed in that letter, Weiner's vision is messianic. He notes that robots and drones are replacing workers now, and sees LinkedIn as a force for creating new opportunities.

Want to know more about the cloud? Visit Light Reading Enterprise Cloud.

And all of that is right up Microsoft's alley.

Microsoft CEO Satya Nadella said in an open letter to employees announcing the acquisition: "In essence, we can reinvent ways to make professionals more productive while at the same time reinventing selling, marketing and talent management business processes."

LinkedIn will "retain its distinct brand and independence, as well as their culture which is very much aligned with ours," Nadella says. "Jeff will continue to be CEO of LinkedIn, he'll report to me and join our senior leadership team." Weiner will decide where it makes sense to integrate the two companies: He compares the integration to the independent structure enjoyed by YouTube Inc. inside Google (Nasdaq: GOOG), and by WhatsApp and Instagram inside Facebook .

But while LinkedIn might retain its identity and independence, there's a lot of application and platform integration planned once the acquisition closes (due this calendar year).

Next page: Key areas of integration

Key areas of integration
Weiner has outlined some key areas of planned integration. These include:

And for LinkedIn, it's also about ads: Weiner is particularly excited about "giving Sponsored Content customers the ability to reach Microsoft users anywhere across the Microsoft ecosystem, unlocking significant untapped inventory."

Nadella also sees great potential in the LinkedIn News Feed, the social network's fastest growing application in terms of user engagement, with "fantastic traction," he said on an joint call with Weiner announcing the tie-up. Nadella called the News Feed "very relevant ... based on what the LinkedIn profile contains, which is you, your skills, your profession, your company, and your industry."

By marrying the two companies, the News Feed could go further, integrating information about projects you're currently working on, and calendar information, as well as Microsoft's developing AI and machine learning. And that traffic could feed more intelligent advertising.

Microsoft is looking to marry the News Feed with the Cortana intelligent assistant. "Just imagine you're walking into a meeting and Cortana now wakes up and tells you about the people you're meeting for the first time ... all the things that you want to know before walking in and meeting someone, because you have the access to the professional network," Nadella said. "Cortana is about knowing everything about you, your organization, the work and now the professional network."

Intelligent assistants that whisper meeting preparations in your ear are very science fictional. In the shorter term, the marriage between Microsoft and LinkedIn presents an opportunity to give Microsoft an extra weapon in its unified communications battle with Cisco Systems Inc. (Nasdaq: CSCO)

By integrating Skype for Business and Office 365 with LinkedIn, Microsoft would broaden the reach of its multimedia communications platform and provide LinkedIn users more tools for connecting with their contacts.

But there's also a downside to the partnership.

Both Microsoft and LinkedIn are facing financial challenges. Microsoft's transition from a 20th-century-style software provider to a cloud provider isn't going fast enough, Microsoft chairman John Thompson told Bloomberg this month. He's concerned that Microsoft's business is still too reliant on on-premises enterprise software, a segment which could "evaporate" as quickly as IBM's enterprise business or AT&T's landline dominance. Thompson spent 27 years at IBM, and another Microsoft director, Chuck Noski, is CFO of AT&T. (See Microsoft Sees AT&T & IBM as Scary Lessons – Report.

In Microsoft's most recent quarterly report, its "intelligent cloud" business grew 3.3% driven mainly by a 120% year-on-year increase in revenues from Azure Cloud services, to $6.1 billion, though operating profits declined by 14%. The intelligent cloud business includes traditional server software as well as Azure. Overall revenue fell to $20.53 billion for the third quarter ending March 31, lower than the $22.09 billion analysts expected, and down from $21.73 billion in the year-ago quarter. Net income declined as well. (See Microsoft: Cloud Growth Fails to Offset Overall Revenue Decline.)

Likewise, LinkedIn is facing its own difficulties. The company reported an operating loss of $150.9 million for the full year 2015 and posted an operating loss of $66.2 million for the first quarter of 2016.

In buying LinkedIn, Microsoft faces the challenge of integrating two companies that are facing challenges and turning them into a single successful business. But if it wins, Microsoft could transform itself into an even bigger powerhouse, combining its cloud and on-premises software with rich stores of business information and interpersonal connections running on the LinkedIn cloud.

— Mitch Wagner, , Editor, Light Reading Enterprise Cloud.