Microsoft Confirms Purchase of Skype for $8.5 Billion

[Michael Essany]

Microsoft is serious - to the tune of $8.5 billion - about better competing against the likes of Apple and Sony when it comes to everything from mobile phones to video game consoles. On Tuesday, Microsoft announced plans to purchase VoIP service Skype in what will be the biggest deal Microsoft has ever done.

The reaction on Wall Street, however, was anything but overwhelmingly positive in response to the news. Microsoft declined 1.9% premarket after unveiling the purchase plans, stating that Skype will benefit numerous Microsoft products and services like Xbox, Kinect, and Windows Phone, perhaps better competing against Apple's iPhone and it's hugely popular FaceTime video chat functionality.

"Skype is a phenomenal service that is loved by millions of people around the world,” Microsoft Chief Executive Steve Ballmer stated after the acquisition plan was formally unveiled. "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."

According to the Wall Street Journal, Skype will become a new business division within Microsoft. Consequently, Skype CEO Tony Bates will become president of the division and report directly to the big guy himself - Mr. Ballmer. 'Microsoft and Skype share the vision of bringing software innovation and products to our customers," Bates said. "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."

Skype, which was founded in 2003, was acquired by eBay for a relatively paltry $2.6 billion in comparison some six years ago. In 2009, an investment group led by Silver Lake gobbled up Skype, which now appears to have found more permanent home in Microsoft.

Source: Wall Street Journal

[NSXrebel]

ok.

[STM127]

What does this mean for Apple and more importantly us as users? Will Apple now increase Facetime updates to be more competitive with Skype? If history tells us anything, the answer is probably no. Will Apple respond by removing Skype from the iOS? Unless Skype implements radically game changing features, most likely not. However, if Skype does implement innovative features, will we as iOS users be stuck with inferior versions?

[jordbrett]

Most expensive video chat ever

[Jahooba]

I wonder how far Microsoft can take this program. I'm thinking they'll integrate Kinect into this somehow.

[CX3NT3_713]

This means my kinect will get video chat

[thumper_net]

Problem with facetime is its only from apple to apple. Its abit like the old video calling we have had for years but atleast that worked on all platforms , something facetime needs to do as well , as for us with skype on our iphones we wont see any major changes maybe hotmail might be joined into the app which would make skype better , problem is mobile networks are looking into charging apart for voip services inc skype and whatsapp , kpn in holland will be billing apart for skype as they say they are loosing money as everyone uses skype and whatsapp to text and call.

[steve-z17]

$8.5 Billion for a name...crazy!

[R0nst0pable]

It's not only the name it's the name, the users, the already up and running program itself. Pretty good buy if windows phone can infiltrate the business sector and make their video phones a standard. We will see

[emtee25]

I have skype and FaceTime but never use them.

I'm happy just texting and talking as unlimited SMS and 20hours talk time amonth.

[politicalslug]

Typical Microsoft. While not as wasteful as the proposed $60 billion purchase of Yahoo (thank goodness that stupidity fell through), it's still a horrible purchase that will never pay off. Microsoft already runs Windows on 90% (pulled that out my arse but seems likely) of the machines running Skype. Most Americans (of which I'm one) don't realize how popular MSN is overseas and pushing better integration of that service would have been a much more cost efficient method of bulking up their communications services than purchasing Skype. Skype was great back in the day when few services were both free and multiplatform, but I can see gtalk, facetime, and others diluting the waters and negating the value of this massive purchase.

And yes, they are paying $8.5 billion for the name and access to the users, but those users are already running Windows largely and are unlikely to switch smartphone providers based solely on better smartphone integration. As an Xcox user I don't see any benefit here since I don't have a kinect and don't plan on getting one just for video chat. Perhaps I'm the only one, but I prefer texting to calling and calling to videochatting. There's just something inherently wrong with having to put pants on every time I answer the phone (if video's involved). Skype's only real strong usage case is videochat when overseas which I loved, but didn't use more than necessary.

[unison999]

I am sure MS is smart enough to have bunch of lawyers + programmers + accountants to estimate if it is worth buying Skype.
MS do not have to start from ground zero, don't worry about stepping on any patents Skype has, get all Skype subscribers, also eliminate 1 huge competitor to MS while keeping Skype competing against other companies. If MS is serious about this service, then buying Skype can be a good investment on MS part.

[politicalslug]

I am sure MS is smart enough to have bunch of lawyers + programmers + accountants to estimate if it is worth buying Skype.
MS do not have to start from ground zero, don't worry about stepping on any patents Skype has, get all Skype subscribers, also eliminate 1 huge competitor to MS while keeping Skype competing against other companies. If MS is serious about this service, then buying Skype can be a good investment on MS part.

I feel confident saying that Microsoft has lost a good deal of their M&A prowess. I think the proposed Yahoo! purchase speaks volumes on the subject. $60 billion? That would have never been recouped. Heck, they aren't even buying a new product (same with the Yahoo! case) with Skype; they're simply buying a brand and access to users.

[moon#pie]

Commence more skype suckage.

[Shoey5]

It's not only the name it's the name, the users, the already up and running program itself. Pretty good buy if windows phone can infiltrate the business sector and make their video phones a standard. We will see

It's also the technology and just as important, patents they may own that are Voice/Video call related. Who knows, could be Apple, Google and everyone else is paying Skype (Microsoft) royalties in the end.

[steve-z17]

It's not only the name it's the name, the users, the already up and running program itself. Pretty good buy if windows phone can infiltrate the business sector and make their video phones a standard. We will see

It's for the name, and this is the biggest fail for Microsoft, paying money so they can lose money...not the best idea they've had

Commence more skype suckage.

So true.

[iBwizzle]

So... By this the time Skype is integrated in the next Windows phone which carrier will still have unlimited data? Which ISP will offer unlimited data? Google... Please buy T-Mobile and show them how it's done!

[teej1410]

Has Microsoft actually MADE anything or made an original product?

[kuhndsn]

great now I will get blue video screens of death.

So... By this the time Skype is integrated in the next Windows phone which carrier will still have unlimited data? Which ISP will offer unlimited data? Google... Please buy T-Mobile and show them how it's done!

Google would also limit the bandwidth. Once one does it they all follow like cattle. or is it us that follow thru our hard earned $?!?! Either way Google would still charge.

[hammerhals]

Has Microsoft actually MADE anything or made an original product?

oh thats an old story, haha