MicroSoft buys Skype
 

MicroSkype anyone ;)

http://online.wsj.com/article/SB1000...o&mod=yahoo_hs

Don't know if this is a good thing or a bad thing but figured I'd share and let y'all decide :)

It demonstrates how little I know about corporate valuations. When eBay bought Skype in 2005 for around $3B, I figured that would work out about a well as Time Warner buying AOL. Now Skype gets sold for three times their previous valuation and the majority of customers are still using it for free. I guess they must "make it up in volume"...

Saw this on the news, good return on the £2billion the last purchasers gambled.

As one of the (apparently) few people who spend money on it, I have often wondered how they were going to be a long term success. I suppose sale to M$ is the end of the trading bubble! Now we will see what a captive market can bring.

I cannot see that they will kill the golden goose of people like me who spend all the time calling numbers overseas, but suspect the "free" folks are going to get more marketing or integration with M$ products. I assume this will be the rival to Google voice etc and will now be integrated as standard on all Win Mobile devices and even on Win 7 and 8.

It is a HUGE valuation, and honestly I don't see how MSFT can make sense of it other than to think,

A) keep it away from GOOG (and possibly facebook, although MSFT has a big relationship with the FACE)

B) IF (and it was looking less and less so) Skype went IPO, it would most likely cost MORE to buy it out of the public markets.

but still, it was about 4B$ too much

Agree with nmenaker. That said, if (and that is a BIG if) Microsoft gets this integration done right, they'll have Skype on every Nokia Windows phone 7 device, Xbox, pre-installed on all new OS versions and more.

bringing the blue screen of death to skype :p

My reaction: there goes the neighborhood.

Microsoft will have to monetize it somehow. That means: higher fees (MSFT's arrogance has never made them afraid to charge high rates for stuff), selling the data/location/content info for advertising (like GOOG does with gmail), or making it part of a software package that you've got to pay for. Plan on paying more and/or giving up more of your privacy.

Also, consider that Skype has been able to avoid some provisions of the government intercept rules (which is one stated reason that Verizon runs Skype traffic through their cell towers). Without question the government will pressure Microsoft to redesign the system or open it to allow intercept.

maybe
 

I don't really think any of these tings will happen. While msft will need to try to monetize, I don't think they will try to do it directly, like pay for the apps or buy only in a bundle. I think they WILL try to push it out on every OS install as a part of the install, and maybe put a 1$ worth of free usage on new accounts, etc. Also, they are really hoping to make this a cornerstone of the Win 7 platform, and will hopefully, evolve the telephony/VOIP features to move away from carriers. Advertising will most likely INCREASE on skype but we knew that was coming and also the use of location services for target advertising is simply going to be a reality for ANY platform. I thin they will NEVER, however, realize the 8.5$B spend.

I just don't see what is worth 8.5 billion dollars to Microsoft. Microsoft has the components in MSN and its currents VOIP stable to put out a Skype competitor in about five minutes.

SKype isn't huge in the US market (but it has made inroads). My only thought is that Microsoft is trying to make a viable social media competitor to Facebook and sees this as a part of it. Perhaps, they think that molding it into IE10 will give them a Mozilla Killer, but then they'll need to relaunch on Mac or they will have a problem.

NPR thought that business conferencing might be where they are going. I think the only way this would be true would be if they created the glue to connect SKype into the existing business conferencing systems.

Microsoft had to have a reason for this purchase, but I'm struggling to figure it out.

Like Scott said, this gives them the ability to integrate Skype theoughout their stack, while keeping it away from competitors. They've already announced plans to integrate with Xbox and Kinect, so now any TV with a Kinect can become a giant motion-operated video chat device. They didn't NEED Skype for that, but the acquisition gives them access to 600 million Skype users.

It's pretty obvious that the Kinect is becoming central to their home entertainment device strategy and they're thinking about ways to extend its usage far beyond playing video games.

And don't forget that Skype revenue is closing in on $1B/year - so even if Microsoft just leaves them alone, it won't be too hard to have them bring in some cash.

So long as I still have free Skype on my Three Mobile and it is still supported on my Linux Netbook I don't really care who owns the company.

Makes more sense MS owning it as I never saw the logic in Ebay purchasing it.

The one big danger not yet mentioned that worries me is M$ dogfooding Skype.

If anyone remembers when Hotmail was independent, it was a tight little service built on UNIX. Once M$ acquired it, they basically ported it wholesale into a Windows environment, and that process was extended, buggy and painful.

And today, Hotmail is still not fully compatible with Outlook, but it is bloated and full of ads.

MSFT wanted access to Skype's existing user base of 170mm people.

I can't imagine it would be technical challenge for MSFT to just add some sort of MSN video conferencing etc to its various platforms, but this way they can instead add Skype and all of its existing users vs trying to lure them away.

Skype accounts for 12% of all international calls, so really a huge potential market. I'm sure we will see integrated Skype links popping up on Xbox, Windows Mobile, Outlook, Office, IE etc etc.

No amount of monetization will recoup the $8.5B they just spent, as the prime attraction for most Skype users is that the service is free! MSFT is hoping the various synergies will more than make up for the pricetag. Time will tell.

I'm using Google voice / Google chat / Google video chat these days, and even my Android phone has Google video chat. Good thing Google didn't over-spend on Skype.