Unless you live in a cave in the Siberian tundra, by now you all know that Microsoft has bought VoIP major Skype for a whopping 8.5 billion and in cash!
For starters the acquisition is an expensive one for Microsoft. Not only is it the largest price Microsoft has paid for a company in decades, Skype is not yet profitable. Despite revenues totaling $860 million last year and operating profits of $264 million, the company lost $6.9 million overall, according to documents filed with the SEC. And the company carries $686 million in debt.
But then am sure Steve Ballmer has his reasons.
So let’s just think the probable reasons for which MS might have gone ahead with this deal.
One obvious thing that comes to mind is the impending launch of the Windows 7 phone and the possibility of integrating Skype with the OS to compete with Facetime.
Then there is the possibility of integrating Outlook Express with Skype to give the email client a versatility that it is currently missing. Tomorrow, maybe we will see an Outlook Express that allows VoIP, and enables calls/ conference calls/ video calls – all possible right from the mailbox of an enterprise client. The whole experience of Microsoft Meetings can become better.
The other thing that comes to mind is the Office 365 beta suite which has a gaping hole in terms of VoIP support when it comes to the Lync application. This buyout will definitely plug that hole.
Apart from that MS has scores of products like the XBox and Kinect where Skype would undoubtedly play a big role.
From Skype’s point of view it gives them inroads into Microsoft’s advertising muscle and an entry into the enterprise space. While they have been undisputed champions of consumer VoIP, they do not have any presence in the enterprise sector. With this deal it would be interesting to see Skype’s enterprise aspirations.
So the question is now that they have a VoIP strategy what would MS do with MSN Messenger?
Also how feasible is the idea that Skype’s user base of 663 million of whom 8.8 million are paying users , would become Microsoft converts ?
Obviously MS developers could have rolled out a VoIP product, so the user base of Skype definitely is a big push in this decision. But will it let Microsoft gain traction in the wireless space where it is lagging behind? The next year would tell.
But 8.5 billion? In Cash ?