Microsoft buys Skype for the staggering $8.5 billion, to use it in Windows Phone 7 and Kinect

Microsoft buys Skype for the staggering $8.5 billion, to use it in Windows Phone 7 and Kinect
If you've never used Skype, you might say that Microsoft just paid $8.5 billion for some glorified chat software. Even if you've used Skype, you might still say the same, that's how many eyebrows Microsoft's biggest acquisition to date raised. Rumors about the deal were floating around for a few days, reaching a crescendo level yesterday.

Microsoft announced today that it will buy Skype from its majority owners, among which is also the Canada Pension Plan, that acquired it in 2009 when Ebay parted with a large stake in the company.

Ebay's idea was to use Skype for buyer-seller communication, but quickly figured out that people prefer the no-hassle anonymity more than direct contact when selling or even buying stuff online. It sold 65% of it for $1.9 billion, after acquiring Skype for $2.6 billion. With Microsoft's purchase for the staggering $8.5 billion, Ebay even makes a bit of money on the whole, parting with its remaining percentages.

What's more interesting, though, is what will Microsoft do with Skype to justify that it just shelled out $8.5 billion for the service, assumed its debt, considering it has chat software, both consumer and enterprise. After all, Skype lost $7 million last year, on more than $800 million of revenue. It was also plagued by patent lawsuits, but that has obviously been resolved in one way or another. So that leaves Microsoft buying Skype for said patents, for its video chat capabilities, and for its established network of 170 million users, coupled with its brand recognition.

The Redmond software giant's clarification is that it will integrate Skype with Xbox 360 and Kinect for video chats, with the Windows Phone platform, as well as merge it into its corporate communication software Lync and Microsoft Outlook for real-time communication.

Do these intentions warrant the hefty $8.5 billion price? It remains to be seen, but there is obviously something brewing in CEO Steve Ballmer's head, after quietly taking over Nokia from the inside and after buying Skype, and we have the feeling cloud and mobile are a big part of Microsoft's future strategy.

Microsoft says it will continue support for Skype on other platforms, like iOS and Android, but now that it owns the service, it might as well throw crumbs at the competition, and keep any current or future aspects of Skype's functionality for itself.

source: Microsoft

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36 Comments

1. protozeloz

Posts: 5396; Member since: Sep 16, 2010

well Viber here I gohttp://goo.gl/3Fe7y DX, sure hope IO has news regarding Google talk, because Skype may be turned into a MS phone service only or limited on other OS's

3. JeffdaBeat unregistered

Eh...I know Microsoft is known for some stupid moves (including possibly this one), but would it be smart to limit Skype? Skype features alone won't push consumers to a completely new OS. Plus, Microsoft could probably push some premium cost on using Skype on different OS's...although I don't know how successful that will be. I dunno...I just don't see why Microsoft couldn't just do this themselves instead of buying a company...but I guess it puts the company behind every Skype icon out there so they already have the market they need...

8. protozeloz

Posts: 5396; Member since: Sep 16, 2010

I know it may not be smart to limit Skype, I just hope they decide to remain the same or make little changes... but they sometimes like to mess things up and the decision to cut support and make it an windows phone windows computer full feature service may be floating around their heads... I'll just cross my fingers and start testing some other services just in case

12. jogutier

Posts: 324; Member since: Feb 12, 2010

I do think this will open the door for Tango. Maybe even get Android to tweek it and perfect it. :)

21. downphoenix

Posts: 3165; Member since: Jun 19, 2010

spoken like a true apple fan.

31. Lucas777

Posts: 2137; Member since: Jan 06, 2011

wherd u get that from at al?

4. NMexpo unregistered

So Skype gets boughten out by Microsoft and you decide to "leave" before any changes have been made? Shouldn't you wait and see first. Just saying because it's not guaranteed to change. If Viber could take off, that would be good for the industry.

10. protozeloz

Posts: 5396; Member since: Sep 16, 2010

well I personally hold a network with a bunch on friends we all communicate using cross platform services to stay in touch, choosing the right service its sometimes a problem and takes time to find a replacement. one example is RIM removing KIK of the market and suing them, Google buying Gizmo, twitter getting tweetdeck to destroy it... finding s good service takes time... in the end it may not be Viber but sure when something hits us will try to have a backup to run to

11. jogutier

Posts: 324; Member since: Feb 12, 2010

A perfet match, one sucky OS buys another sucky app. Match made in heaven.

22. Toshu unregistered

Did you read the press-release? Microsoft stated that they will support non-Microsoft services... so don't worry they wont act like Google do with gMaps ... but I personally think that MS should make Google pay, MS supports Android and iOS by making and updating good apps.. and Google puts one miserable Google search app for WP7 users (witch is basically a link to m.google ...) so the fair thing is to put down Skype for Android, but MS wont go so low... they are better than that.

25. protozeloz

Posts: 5396; Member since: Sep 16, 2010

there is only one app from MS on the android market and its BING, no msn, no outlook no others, go and see for yourselfhttps://market.android.com/developer?pub=Microsoft +Corporation and yeah I read the whole thing, but how can I trust its true? yeah I can keep using the service, but I may not get any new features and leaved with an obsolete version of the application that's as bad as not having the service at all. now you think Google is going to pay? if Microsoft does make the app exclusive to windows in general people with no PC may start using other services like Google talk.

27. protozeloz

Posts: 5396; Member since: Sep 16, 2010

I haven't tried WP7 yet but Google search had a great app for 6.0 and 6.5 witch I had tested. Now there are many apps available for both wimo (versions 6 and 6.5) and iOS for example Google search similar to android's apphttp://www.google.com/mobile/google-mobile-app/ and they offer sync services with either an app, or easy to do configurations to get your gmail contacts and your email on any mobile OShttp://www.google.com/mobile/sync/ and maps? maps are everywhere http://www.google.com/mobile/maps/ latitude its also on most OShttp://www.google.com/mobile/latitude/ and youtubehttp://www.google.com/mobile/youtube/ now Google updates and adds features to android faster but if you check other versions are also getting updated maybe bot really fast updates but constant updates now how old is WP7 again? Google has quite a couple of years and the number of apps MS has developed for them is minuscule

2. jthiagesan

Posts: 104; Member since: Apr 20, 2011

Microsoft Sucks!!!!

6. Henrik unregistered

And so do probably you too. News flash?

5. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

Absolutely! All new Skype development will be focused on Skype for WP7. Whatever legacy versions of Skype exist will be frozen. If you want to use Skype going forward, be prepared to move to WP7. I suspect that Google is going to be adding a Skype-like function to Android in the not-too-distant future.

7. Henrik unregistered

Yeah, it's called Google Talk/Google Voice. But from what I've heard, Skype is the only one yet who can deliver functional video calls over 3G (not just WiFi). And they probably hold some pretty strong patents in this area, otherwise Microsoft wouldn't give a fudge :-) Apple's "Facetime" is a joke and disgrace.

13. remixfa

Posts: 14605; Member since: Dec 19, 2008

fring, yahoo, and Qik work for video and voice calls over 3g. Skype isnt the only solution.

14. taco50

Posts: 5506; Member since: Oct 08, 2009

Please explain why facetime is a "joke and disgrace"

18. Droid_X_Doug

Posts: 5993; Member since: Dec 22, 2010

Being able to deliver functional video calls over 3G may not matter in a year or so when 4G is rolled out.

9. InspectorGadget80 unregistered

LOOKS like SKYPE is going to get fucked up by M$.

15. tonythetiger123 unregistered

Skype video on Verizon Android systems forget about it. So much for the front facings camera now on my TB. I will not get a WP7 phone. I would buy an iphone if it were my choice between ios and WP7.

29. Rich unregistered

hey bro... hope u read this. the skype with video app for the thunderbolt leaked out about a month ago. i have it on mine and works great. go to google and search "thunderbolt video chat help" a few results down is a page about the skype for TB review. you can find it on that site to download the app.

16. tonythetiger123 unregistered

maybe this will boost Nokia smartphone sales now. A Nokia, LTE, WP7, dual core, retina display, skype video enabled smartphone with 1gb ram, 32gb sd removable sd card, 10 megapixel rear camera, and 2 megapixel front facing camera. DREAM ON

24. nb2six

Posts: 298; Member since: Apr 27, 2011

LMAO!! best post of the day!!

17. St. Jobs unregistered

Who is the tard who wrote this article? Daniel P? Clearly by the selection of the photos you are biased already. Nice article, however. You should really try to be more neutral, however. Good luck on your next one.

19. bossmt_2

Posts: 459; Member since: Oct 13, 2009

You can bet they'll keep skype running on other OS, I mean it's like when Dish Network bought Slingbox. They use the proprietary technology in their own devices, but still sell it to others. That's generally what you try to do here, keep the company itself profitable (don't know how it works on iOS but I"m sure Microsoft will make advertising money from Android ) but also try to improve your bottom line.

34. remixfa

Posts: 14605; Member since: Dec 19, 2008

concidering MS owns a good chunk of apple.. (fanboys dont seem to realize that) its in MS's interests to make sure skype stays open to apple and other companies. They make money from people using skype so why would they limit its user base?

20. IOS5 unregistered

So no more Skype for iPhone and iPad?!

23. Uzzelien

Posts: 131; Member since: Feb 22, 2011

Wow I'm glad to see phone arena is in full effect with their anti microsoft information. "Microsoft says it will continue support for Skype on other platforms" so how is this like throwing crumbs to them? MS supports Android while Google doesn't release youtube code to them and MS is the devil, dam them!

26. nb2six

Posts: 298; Member since: Apr 27, 2011

first off why should Google release it to them. In my opinion I don't think any of the companies should share their services with other companies. It makes for more innovation within the industry. Everyone sharing everything would be like Motorola and Samsung deciding they are going to make the exact same phone and just put a different company name on it. I also see where you're coming from though. But with a technology like Skype, there are plenty of other options already out there that can compete so it's not really an issue if Microsoft shares or not.

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