Wednesday, 11 May 2011 00:41

Microsoft pacmans the Skype power pill - but why?

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Microsoft has agreed to purchase Skype only days after news reports suggested either Google or Facebook was interested in the company, with Microsoft aiming to blend Skype throughout its offerings, but at a massive price: US $8.5 billion!


With Microsoft entering into a 'definitive agreement' under which the company will acquire Skype for US $8.5 billion, one immediate question is'¦ why?

Microsoft already has its own Windows Live Messenger software, offering IM, voice and video chatting, with membership and usage figures larger than Skype attains for its own otherwise nearly ubiquitous communications platform.

Naturally, Microsoft talks about how the acquisition 'will increase the accessibility of real-time video and voice communications, bringing benefits to both consumers and enterprise users and generating significant new business and revenue opportunities', while extending 'Skype's world-class brand and the reach of its networked platform' and 'enhancing Microsoft's existing portfolio of real-time communications products and services.'

Skype differs from Windows Live Messenger in that it sells discounted telephony services and is available on a wide range of platforms, including TVs.

Under Microsoft's ownership, the company says Skype will 'support Microsoft devices like Xbox and Kinect, Windows Phone and a wide array of Windows devices, and Microsoft will connect Skype users with Lync, Outlook, Xbox Live and other communities', and promises to continue 'to invest in and support Skype clients on non-Microsoft platforms.'

However, for Microsoft to earn back the $8.5 billion it has spent, Skype needs to become truly ubiquitous and a major tour-de-force in paid global telecommunications, while integrating as seamlessly as possible with as many of Microsoft's products as possible, along with what is promised to be 'new ways' to communicate and collaborate.

Microsoft's CEO, Steve Ballmer, said that: 'Skype is a phenomenal service that is loved by millions of people around the world. Together we will create the future of real-time communications so people can easily stay connected to family, friends, clients and colleagues anywhere in the world.'

Skype's current CEO and soon-to-be 'president of the Microsoft Skype Division reporting directly to Steve Ballmer', Tony Bates, said that: 'Microsoft and Skype share the vision of bringing software innovation and products to our customers. Together, we will be able to accelerate Skype's plans to extend our global community and introduce new ways for everyone to communicate and collaborate'.

 

Continued on page two, please read on!

 


Presuming there are no hiccups and that the deal goes through smoothly, the acquisition will be Microsoft's biggest yet, following the US $6b acquisition of online ad firm aQuantive, although there was that aborted $48 billion Yahoo takeover attempt that ultimately never went through.

The deal is also a way to keep Skype out of the hands of competitors, and while it is a very pretty penny to pay, Microsoft clearly believes it is absolutely worth it.

Will telcos be thrilled at Skype clients built into future Windows Phones that would aim to even more effectively bypass telco charges for anything but mobile data?

Will Skype and Windows Live Messenger be 'merged' into one product, or will the two exist as separate products for some time to come?

Will Microsoft really be able to make its $8.5 billion investment really pay when eBay's attempt saw eBay on-sell Skype at a loss?

These and other questions are yet to be answered, but if someone asks 'who you gonna call', Microsoft clearly hopes your answer will be 'someone through Skype!'

 

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Alex Zaharov-Reutt

One of Australia’s best-known technology journalists and consumer tech experts, Alex has appeared in his capacity as technology expert on all of Australia’s free-to-air and pay TV networks on all the major news and current affairs programs, on commercial and public radio, and technology, lifestyle and reality TV shows. Visit Alex at Twitter here.

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