Microsoft Scoops Up Skype for $8.5 Billion in Cash
Microsoft Scoops Up Skype for $8.5 Billion in Cash
Posted 05/10/2011 at 7:42am
| by Paul Lilly
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Microsoft, the world's largest software maker, announced today it has inked an agreement to purchase Skype Global for $8.5 billion in cold, hard cash. This ranks as Microsoft's biggest acquisition ever, and the Redmond software giant hopes its money will be well spent as it looks bolster its voice and video communications, and go up against Google and other rivals. Still, at $8.5 billion, the obvious questions is, did Microsoft overpay?
That depends on what Microsoft does with it. Microsoft says the acquisition will increase the accessibility of real-time video and voice communications, which it will pitch in some form or another to both home consumers and enterprise users. And with Microsoft now owning the VoIP service, expect to see Skype support shuttled across Microsoft's entire portfolio, from devices like the Xbox and Kinect, to Windows Phone, Lync, and Outlook.
"Skype is a phenomenal service that is loved by millions of people around the world," said Microsoft CEO Steve Ballmer. "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."
Still, Microsoft has its work cut out for itself. As The New York Times points out, Skype generates most of its income from a small subset of users who pay for long distance calls to telephone numbers, and in 2010, Skype reported a net loss of $7 million. The high price tag makes it easy to criticize Microsoft on this one, though not everyone agrees it's such a bad move.
Forbes wrote a lengthy piece in defense of the $8.5 billion deal, saying that both Facebook and Google were interested in the service, and even if Microsoft never makes any money with this, "they've weakened Google a little from taking this asset from them." Microsoft also has the option of licensing Skype software to Facebook, which would make both companies more valuable (and remember, Microsoft is already invested in Facebook). And at the end of the day, it's not like Microsoft had to beg, borrow, and steal money to get this deal done. The deal costs Microsoft $8.5 billion, or 17 percent of the cash they had on their balance sheet at the end of the quarter, Forbes says.
What are your thoughts on this deal?
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deceso23
May 13, 2011 at 1:28am
Never seen such nerveless writer. I register it all the way to the end. Stay them reaching.
Regards
rseding91
May 10, 2011 at 2:22pm
Skype has sucked from the day I downloaded it (2 years ago ish). I had to get it for work.
It constantly crashes on me, messages from 3 months ago randomly pop up again like they are new and atleast 50% of the time it shows a contact as offline when they arn't.
I don't know why MS would want skype - it sucks.
WLM has been running solid for me for the past 3-4 years.
Satchboy
May 11, 2011 at 6:20am
I've been using Skype for video and voice chats for over 3 years and it's always as solid as a rock for me. Even when I'm talking to 5 or more people scattered across the world.
Justin.Kerr
May 10, 2011 at 11:58am
I wonder what will become of these clients. Part of what made the service so popular is that you could use it on anything.
I-8-NY
May 10, 2011 at 11:39am
thankyou M$ for ruining another app. I got to go find another VOIP app that will work on linux like skype that currently works. I wounder how much skype usage will drop with M$ buying it.
praetor_alpha
May 10, 2011 at 9:25am
I was hoping that they'd at least update the Linux version. Doesn't look like that's going to happen. Ever.
BAMT
May 10, 2011 at 2:02pm
I'd like to see improvements to the Linux version, too.
@MPC: That Ballmer pic is getting old.
dentaku
May 10, 2011 at 9:25am
They showed that Skype will be coming out for the Windows Phone 7 "mango update" at MIX11 this year but there wasn't any rumors of them actually buying the company.
So, there you go, Alan Fackler will definitely be able to use Skype on his phone now.
I guess Andy and George will too (at least think George has one).
aca20031
May 10, 2011 at 8:26am
I usually don't mind Microsoft, but the latest version of Live Messenger crashes all the time, lags, and gives you no option to change your display name and many other things.
I used to use it all the time but got fed up and switched to Skype as my primary messenger...and now Microsoft has bought it. I can see them pushing their crappy Live changes to it now.
Phrish
May 10, 2011 at 8:26am
Funny. Wonder if this is why Skype updated itself and then promptly crashed...
adumontet
May 10, 2011 at 8:02am
I wander if Microsoft is going to intergrate Skype and Live Messenger or keep them seperated.
If they do, a lot of companies will have to check their firewall settings as most block Live Messenger but very few block Skype as it get thru almost any proxy and firewall to get out to the web.
Also, will Microsoft change the subscription fees of Skype or keep everything the same and just play with the name and the licensing of the software.
Time will tell.
nHeroGo
May 10, 2011 at 7:56am
My guess is that Ballmer buys Skype so it won't fall into Google's hands - they don't like each other.
Somebody made a good profit here; maybe $7B?
Skype was created by two blokes in Denmark/Sweden, and sold to Ebay for ca $2.5B. Ebay lost ca $1.5B and sold it off the the Netscape-guy and some other companies, which in turn sells it to Microsoft for $8.5B. The consortium that Microsoft is buying it from must only have owned Skype for 2-3 years, I think, so a $7B profit during a 1000 days of ownership proves to be a good hourly pay.
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