Print 75 comment(s) - last by Gzus666.. on May 11 at 5:35 PM

Microsoft digs into its deep pockets to snatch up Skype

The Wall Street Journal reported earlier tonight that Microsoft was in talks to purchase VoIP company Skype for between $7 billion and $8 billion. Kara Swisher just recently confirmed the acquisition in her BoomTown column, starting that the deal is worth an estimated $8.5 billion. 

Earlier reports stated that Google and Facebook were duking it out to get a piece of Skype, but in the end Steve Ballmer and Microsoft's huge chest of cash put an end to those discussions. The earlier reports also pointed to a Skype valuation of $3 to $4 billion, so Microsoft's $8.5 billion purchase price hopefully will bring a hefty ROI.

For those keeping score, eBay bought Skype in 2005 for $2.5 billion. Four years later, eBay sold a 65% stake in the company for $1.9 billion.

The first beta of Skype was introduced in 2003, and as of December 2010, it had over 663 million registered users. The average number of monthly connected users is much lower, however, at 145 million. And when it comes to users that actually pay for the service, the numbers drop down to just 8.8 million. 

Registered users can make Skype-to-Skype calls and one-to-one video calls for free. Users can make Skype-to-phone calls at a rate of 2.3 cents/minute. Skype also offers subscription plans at a rate of 1.2 cents/minute. 

We'll have to wait a few more hours until we get all the juicy details on Microsoft's latest acquisition, but we're betting that the boys from Redmond plan on tightly integrating Skype with Windows Phone 7 to better compete with Google Voice.

Updated 5/11/2011 @ 8:34am

Well, the news is now official. Microsoft just announced that it is acquiring Skype for $8.5 billion in cash. Microsoft says that Skype will bolster its "existing portfolio of real-time communications products and services."

As expected, Skype will be tightly integrated into the Xbox 360 and Windows Phone 7 platform. Microsoft is also creating a new business division called the Microsoft Skype Division, which will be headed by Skype CEO Tony Bates (he will report directly to Microsoft CEO Steve Ballmer).

“Skype is a phenomenal service that is loved by millions of people around the world,” said 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.”

“Microsoft and Skype share the vision of bringing software innovation and products to our customers,” said Bates. “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.”

You can read the full press release here.

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By stburke on 5/10/2011 2:04:57 AM , Rating: 5
8.5 billion! Isn't Skype's market cap at like 3 billion? Either way I really think MSFT is doing a helluva job and they're going to be a larger player in the mobile than anticipated. Nokia Hardware with WinPho7, deeply integrated Skype, Kinect with Skype? Nice.

RE: So...
By mcnabney on 5/10/11, Rating: 0
RE: So...
By smackababy on 5/10/11, Rating: 0
RE: So...
By Smilin on 5/10/2011 10:29:20 AM , Rating: 5
They aren't "innovating" anything with this. They are buying a name. Why? For people like you.

You must not realize that MS already has a video solution that makes Skype look like a telegraph. When Skype starts doing "magical" stuff in a few years people will think it is something new when it's something MS has already been doing (in Lync 2010, Livemeeting, Messenger, Video Kinect, integration with PSTN, SIP trunks, AOL, MSN, Yahoo, XMPP, etc..).

MS has a crushing image problem right now. Nobody gives them credit when it's due.

RE: So...
By Camikazi on 5/10/2011 10:33:58 AM , Rating: 2
I think that post was a little jab at Apple, the "Magical" company that copies most all they do :P

RE: So...
By Smilin on 5/10/2011 11:58:01 AM , Rating: 2
If you look behind past me, above and slightly to the left, you can just make out the dot of where that flew past me.


Seriously: MS has killer VoIP and Video (just ask Cisco who they've beat to a bloody pulp the last 3 years). Add MS tech and especially integration to Skype and some bajillion users are going to be really happy.

RE: So...
By EricMartello on 5/10/2011 3:56:50 PM , Rating: 1
You must not realize that MS already has a video solution that makes Skype look like a telegraph. When Skype starts doing "magical" stuff in a few years people will think it is something new when it's something MS has already been doing (in Lync 2010, Livemeeting, Messenger, Video Kinect, integration with PSTN, SIP trunks, AOL, MSN, Yahoo, XMPP, etc..).

What are you talking about? You think rattling off a list of loosely communications programs means MS had something better than Skype? Lync 2010 isn't even comparable to Skype! Livemeeting? Seriously?? No, not even in the same class. The only relevant thing on your list is Messenger, which actually relied on Skype's technology for video calls.

MS buying Skype is a smart business decision because it's giving them access to a large, established user base along with a recognized brand. MS can also make use of Skype's P2P networking technology which is the main differentiation between Skype and just about all other IM clients out there.

RE: So...
By PrezWeezy on 5/10/2011 5:12:31 PM , Rating: 4
You've never actually used Lync or Livemeeting before have you?

RE: So...
By Smilin on 5/10/2011 5:36:45 PM , Rating: 3
What are you talking about? You think rattling off a list of loosely communications programs means MS had something better than Skype?

No. My point was to illustrate that Microsoft has absolutely no need of the technology used by Skype. There is nothing at all revolutionary about their product.

Skype does not compete in the markets that MS is already in. They simply lack the feature set to do so.

Lync 2010 isn't even comparable to Skype!

You're right, it's not. Skype is a tinker toy compared to Lync. It lacks the security, the compatibility, the open standards, and the features. Man oh man does it lack the features. Before you get all stompy on your soapbox you might want to go figure out what Lync does.

The only relevant thing on your list is Messenger, which actually relied on Skype's technology for video calls.

That's interesting since Messenger had video since before Skype was even a company.
MS can also make use of Skype's P2P networking technology which is the main differentiation between Skype and just about all other IM clients out there.

Please explain more about the P2P **networking technology** (my eyes are rolling). All SIP based VoIP and Video solution out there use peer to peer communication. The server is not required for the simple features that Skype offers. If you want to do anything at all more advanced you'll need a server in the mix. PSTN and SIP trunk providers don't just let random clients come knocking on the door you know.

It cracks me up that you think Skype competes with Lync. I get it: you like Skype and think nothing out there compares. I also get that you know nothing of Lync.

MS is buying a Name and a consumer userbase. They have no need of Skype technology. In fact, Skype is so proprietary that it will be 10x hassle to fix their code to make them interoperate worth a crap.

RE: So...
By seamonkey79 on 5/10/2011 9:35:11 AM , Rating: 2
Why innovate when you an appropriate?

RE: So...
By StanO360 on 5/10/2011 11:18:01 AM , Rating: 2
All corporations do that. So what?

RE: So...
By sviola on 5/10/2011 11:20:37 AM , Rating: 2
Like Google bought Writely (for Google Docs), YouTube and lately the Air Ticket software provider? Or like IBM with Rational, Cognos and others? Or Oracle with Sun? Or Apple with Liquid Metal and that processor design company? Or AMD with ATI? or Nvidia with their recent acquisitions?

In this case, MS is going after the 170 million Skype users (among consumers and businesses).

RE: So...
By callmeroy on 5/10/2011 11:38:23 AM , Rating: 3
Are you honestly that dense about the business world or just trying to be funny?

Its one thing to bust on a company that buys a technology if they talk it up like they created -- then fine have at cracking on them with jokes about lack of innovation, its fair game at that point.

But its naive, at best, to pretend companies don't buy up other companies or products of other companies routinely...that's how business is and has been for longer than anyone reading this forum has been alive. Likewise, it will continue long after anyone reading this forum is dead as well.

RE: So...
By nolisi on 5/10/2011 12:02:11 PM , Rating: 2
Technically, you're right, they aren't innovating. But this is a hell of a business strategy. Here's what the press release isn't saying:

1) Microsoft has just eliminated a competitor.
2) This will (over time) give Microsoft credibility as far as being able to publish application across differing platforms/app markets
3) It gives them the unique ability to make international calls cheaply, bypassing the carrer.
4) Skype is an exciting name in the market place, and having the power to control its direction will give MS the opportunity to tightly integrate it with other products (Microsoft Office/Communications and give Skype the professional credibility it hasn't had.
5) With the existence of Skype on multiple platforms/mobile ecosystems, will allow Microsoft to more tightly integrate various modes of communication on competing platforms (Android, iPhone) into MS's corporate infrastructure- bolstering reasons to use their platform.

I'm sure that's just the beginning.

RE: So...
By Taft12 on 5/10/2011 12:28:15 PM , Rating: 1
3) It gives them the unique ability to make international calls cheaply, bypassing the carrer.

Only is if the carrier will let them. They will not.

4) Skype is an exciting name in the market place

It has been for many years now, and hasn't led to profitability. I can't see how that will change despite new ownership and a high pricetag.

RE: So...
By Smilin on 5/10/2011 1:51:59 PM , Rating: 2
Only is if the carrier will let them. They will not.

I don't think you understand. This is already being done. Microsoft Lync users make international calls free. The carriers have no say in this whatsoever.

It has been for many years now, and hasn't led to profitability. I can't see how that will change despite new ownership and a high pricetag.

You're thinking small picture here. This isn't about making money with direct revenue off of skype...I mean they offer a free service right? This is about selling Windows phone and selling Ad marketshare (which again is what Windows Phone is about). It's also about integrating with existing properties to boost them (messenger, lync, xbox, wp7, win8, etc)

Between this, the Apple partnership on search, and the yahoo partnership with Bing, Microsoft is getting a large enough Ad marketshare that they are a viable alternative to Google.

RE: So...
By omnicronx on 5/10/2011 12:35:56 PM , Rating: 2
Yo oblivious,

Much of the major technology you use today in smart-phones was acquired by a market giant at one time or another.

The precursor Android itself was bought by Google, also much of the multi-touch patents and technology Apple 'developed' were acquired elsewhere. Need to build ARM chips? Why not just buy a company who develops them.. etc etc..

So many of the products you use today were once based on acquisitions its not even funny.

RE: So...
By jvillaro on 5/10/2011 1:56:21 PM , Rating: 2
So if Google or Facebook were the ones that ended up buying, would have said the same thing about them or are you only a retard when MS is involved?

You have to be very naive to think that MS is the only company out there that buys other companies or their tech. This is business and strategy, if they think they can take advantage of Skype's platform good for them and hopefully good for us.

Apple, Google, Facebook, Oracle, etc etc etc do exactly the same thing all the time so just think a bit before you post... even if it hurts you

RE: So...
By MrBlastman on 5/10/2011 11:29:48 AM , Rating: 2
There is a big rule in investing--avoid buy a company that is losing money. If you do, you'll have to do a whole lot more work to even begin recouping the investment.

All Microsoft here has done is dole out some money for another company. The burden is now on their shoulders to prove to us it was worthwhile. 8.5 billion dollars worthwhile.

I think they can do it--if they're visionary about it.

I can think of a few things they could use it for:

- Think the movie "Aliens" in online gaming where you have all your squadmates along the edge of the screen in video windows so you can see them as you're fragging.

- Video conferencing via Kinect.

- Using Powerpoint over the web similar to WebEx (replace it) and have your face on the screen via a Skype applet that is now built in. The recipients wouldn't even need to own Powerpoint to watch.

- Facial recognition algorithms built into the OS that are then confirmed remotely via the cloud to verify identity before Windows 8 will let you log into it.

- Skype mobile w/a bluetooth interface to a pair of glasses so you can watch video conferencing discretely and privately while going about your business instead of having to look at your PDA. This would be radical if they did it... only problem is... how do they see you?

I can probably come up with a lot more. Microsoft is going to have to do something to secure a positive cash flow from Skype. As of now, they constantly lose money. They can't just maintain status quo and expect to get anything out of it. I am completely positive also that Microsoft's executives know this.

RE: So...
By Smilin on 5/10/2011 1:57:43 PM , Rating: 1
- Using Powerpoint over the web similar to WebEx (replace it) and have your face on the screen via a Skype applet that is now built in. The recipients wouldn't even need to own Powerpoint to watch.

MS already does this with Livemeeting and Lync.

This brings up the big reason (I think) that MS is doing this: They need a recognized brand name. They already have the tech it's just (as you illustrate) that nobody knows about it.

RE: So...
By MrBlastman on 5/10/2011 2:24:26 PM , Rating: 1
From an IT buddy of mine--according to him, Livemeeting is terrible and no way has ever achieved the smoothness and clarity that Skype provides. But, I have no idea, I've never messed with it.

RE: So...
By Smilin on 5/10/2011 5:48:10 PM , Rating: 1
Depending on what he's doing he may be correct. I myself wouldn't use Livemeeting to simply make a video call. It's a bit heavy for such a simple task.

Livemeeting (the service, not the on-premises) doesn't use high definition video and it is also burning a lot more CPU and bandwidth for whiteboarding, app sharing, participant lists and such. It was a service built before Skype was even a company and is nearing the end of it's support lifecycle.

OCS 2007 R2, the predecessor to Lync began offering HD video before Skype. Lync does it p2p and in conferences of up to 250 with active speaker switching video and multiplexed audio and uses a far more efficient codec.

Office365 will include the newer Lync Online (which you can buy now is still beta).

In the consumer space, Live Messenger is on par with Skype for AV quality. If there are differences in the experience it's more likely an endpoint issue (CPU, Mic used, network jitter, etc).

Wonder what their angle is...
By digitalreflex on 5/10/2011 7:08:26 AM , Rating: 2
They spent a ton to get this (almost double the valuation) so I'm interested to see what MS has plans to do with Skype. Maybe they plan on integrating it w/ Win 8???

By Master Kenobi on 5/10/2011 7:44:46 AM , Rating: 4
I'd say it is more than likely going to end up over Xbox Live as part of the standard gold membership. It could possibly end up replacing MSN chat as well, just integrate the networks and have everyone use the new MSNSkype client. If they can get it to handle Xbox -> PC calls then so much the better. Not to mention they can also tack on most mobile devices with a simple Skype client. Could be an interesting strategy.

RE: Wonder what their angle is...
By marvdmartian on 5/10/2011 8:13:29 AM , Rating: 1
Knowing Microsoft, to take a perfectly functioning, free service, and turn it into a bloated, slow and expensive service that may or may not function. ;)

RE: Wonder what their angle is...
By Eguichardo on 5/10/11, Rating: 0
RE: Wonder what their angle is...
By Pirks on 5/10/2011 9:18:17 AM , Rating: 4
arghhh those horrible msn passports, they eat your balls, rape your woman and make your mama cry... all fear the devilish invention of The Evil Ballmer!

LOL :)))))))

RE: Wonder what their angle is...
By ians55 on 5/10/2011 11:56:41 AM , Rating: 2
Hide yo kids, hide yo wife and hide yo husband!

RE: Wonder what their angle is...
By Smilin on 5/10/2011 2:09:17 PM , Rating: 3
Yeah just like XBox Live! Or their $6 per user Cloud service with 99.9% uptime. Heck for that price you only get a full IT staff and data center to run sharepoint, exchange, OCS, Office, workstation management, 25Gig mailboxes and support.

Microsoft knows nothing about managing such a large service. Do they even have a website? Well I mean other than Live, hotmail, bing, msdn, technet and all that.

We would have been much better off if Google or Sony had bought Skype. Or Apple..I mean iTunes isn't bloated and expensive compared to that slick Zune site.

.../sarcasm generator hits second try exception waiting on spinlock...

RE: Wonder what their angle is...
By nafhan on 5/10/2011 9:34:10 AM , Rating: 3
Well, overnight they're probably the biggest player in VOIP. I'd be willing to bet integration with the business side of things will be part of the strategy here (if not the main goal of the purchase). Business software is where MS pulls in a good chunk of their money, after all.

I can see a lot of synergies with the purchase, but not sure if it was worth $8.5bil...

RE: Wonder what their angle is...
By Smilin on 5/10/2011 2:11:18 PM , Rating: 2
They were already the biggest player in VoIP. This just makes them the biggest player in *consumer* VoIP.

RE: Wonder what their angle is...
By BZDTemp on 5/10/2011 10:42:07 AM , Rating: 2
Microsoft has realized smartphones is THE PLATFORM and are using their pile of cash to buy whatever they think can be used to gain marketshares in that world. That and they will of course use their position on other platforms to boost their crusade.
Next Microsoft could go for something like NetFlix, but likely that would be dangerous because it would make them platform and content provider.

PS. Janus & Niklas are my heroes. First they sold Skype to eBay and now they sold it again to Microsoft. Kudos.

By thefrozentin on 5/10/2011 1:24:12 PM , Rating: 2
Even though 8.5 billion is a ton of money, it is a drop is Microsoft's bucket. As of April, they had around 50 billion in cash and short term assets. So, the concept of integrating Skype with window, WP7 and Xbox/kinect sounds like a good plan (atleast on paper). This will be an interesting investment nontheless.

By AnotherGuy on 5/10/2011 12:54:20 AM , Rating: 2
Im sure Skype owners will be happy... hard work finally pays off

RE: wow
By Nyu on 5/10/2011 1:01:12 AM , Rating: 3
The original owners actually already sold it not long ago to eBay.

RE: wow
By Solandri on 5/10/2011 2:26:41 AM , Rating: 2
eBay bought it for $2.6 billion in late 2005. $5.9 billion appreciation in less than 6 years. Not a bad ROI.

RE: wow
By bug77 on 5/10/2011 7:58:42 AM , Rating: 2
If only eBay didn't sell Skype long ago.

RE: wow
By Camikazi on 5/10/2011 10:36:01 AM , Rating: 4
eBay has to be upset right now seeing what MS paid for Skype. I would be pissed knowing I sold that company for a loss and the next company made huge profit for it.

RE: wow
By ChuckDriver on 5/11/2011 12:04:04 AM , Rating: 2
eBay nearly doubled its money.

According to the article from the Atlantic, eBay sold 65% of its skype stock to a private equity firm, not all of it.

(The deal) gives eBay a 35% stake in a growing, (likely) profitable company, without the hassle of running it, which benefits eBay in the long-term.

35% of $8.5 billion is a $2.975 billion.

So eBay spent $2.5 billion ($1.3 billion in cash plus the value of 32.8 million shares of eBay stock) in 2005, then got $1.9 billion in cash in 2009 and another $2.975 billion in cash in 2011. They spent $2.5 billion and got $4.875 billion after six years. So that is a 95% return over six years, which is an average annual rate of return around 11%.

I'd say that is a decent rate of return.

By Golgatha on 5/10/2011 9:01:58 AM , Rating: 1
Something tells me the PSP and other smart phones might not have Skype integrated going forward. Also, I wonder what this means for TVs with Skype integrated. Time will tell I suppose.

I for one am a bit torn as a Skype-in and long distance customer. I don't think Skype was hurting as a company, but having Microsoft's money to keep it going into perpetuity is kinda nice.

By Taft12 on 5/10/2011 12:25:30 PM , Rating: 2
If MS were to start cutting off users who are on platforms other than Windows, the userbase will be sent scurrying away to competitor's products.

I won't say MS isn't dumb enough to do that anyway, but it would be a terrible move

By Master Kenobi on 5/10/2011 6:13:47 PM , Rating: 2
I think it would be in Microsofts best interest to do it like they did to IBM. Don't own the phone, heck don't even need to own the platform this time, well from an OS standpoint. Just make skype a solid service available on every handset/os on the market and monopolize it that way.

By delphinus100 on 5/10/2011 8:47:21 PM , Rating: 1
My first thought was the fate of Skype for Mac and Linux as well...

And thus...
By chagrinnin on 5/10/2011 11:31:29 AM , Rating: 5
...Skypenet was born.

By btc909 on 5/10/2011 5:31:43 PM , Rating: 2
So will I be able to finally video chat on an Android to Android device over 3G or 4G? Or will that only happen on a Windows 7 phone?

RE: Android
By Smilin on 5/10/2011 7:19:26 PM , Rating: 2
No, you won't. Blame Google.

Skype competes with Google voice so magic 'compatibility' issues will arise..

By Mumrik on 5/10/2011 4:38:03 PM , Rating: 2
Skype is a HORRIBLE piece of software... I guess one can hope that it'll improve, but I doubt it.

RE: Sigh...
By Smilin on 5/10/2011 7:17:27 PM , Rating: 1
It's not horrible. It just does basically one thing and does it adequately.

Yes, it will improve. This is actually an area where MS is strong.

offline messaging
By ShadowVlican on 5/10/2011 10:26:56 PM , Rating: 2
maybe now their offline messaging will work the way normal people expect it to work... (it currently require both parties to be online before the message is sent)

Fire Ballmer now
Hulk Sad
By NICOXIS on 5/10/2011 12:30:36 PM , Rating: 1
Good Bye Skype :(

What the bloody 'ell could MS want with Skype?
By MartyLK on 5/10/11, Rating: -1
By osalcido on 5/10/2011 3:13:15 PM , Rating: 2
Looks like you picked a bad week to quit sniffing glue

What the hell.
By icanhascpu on 5/10/11, Rating: -1
RE: What the hell.
By ekv on 5/10/11, Rating: 0
RE: What the hell.
By StevoLincolnite on 5/10/2011 3:39:52 AM , Rating: 2
To add... 50mbps means bugger all with 2-way video calls if:

1) Your upload speeds are pitiful. (Think: Less than 1mbps, you need to upload video when doing video conferencing!)

2) Your latency is high due to: Congested back-haul, Distance, Poor contention ratio on your providers networks, or poor peering arrangements with other providers so data has to take a long way around to reach someone.

3) Router is creating errors, so has to resend that information multiple times and/or packets getting lost during transmission.

Then... You have the hardware.
80% CPU usage means bugger all if no one actually knows what the processor is, for all we know it's a Pentium 4, which just ain't going to cut it for HD video.

I use MSN's video "calls" rather often, I set the programs affinity to a single core and I have another 5 cores to do what I want with on my Phenom 2 x6 @ 4ghz, no dramas.

RE: What the hell.
By icanhascpu on 5/10/11, Rating: -1
RE: What the hell.
By Smilin on 5/10/2011 2:15:12 PM , Rating: 1
It's working fine for me.

I think YOU are the one who needs to step back.

RE: What the hell.
By robinthakur on 5/10/2011 8:01:05 AM , Rating: 2
I think that highly technical (and correct) list illustrates nicely why the majority of people can't get it to work...Video calling shouldn't be that complicated in this day and age. Facetime seems to work well enough, hopefully they all come up with a universal standard though. I currently like the fact that I can use skype on my Androids to call my iPhone4 to call my pc etc with video calls over 3G/WiFi. If MS make it all locked down and proprietary then that would be bad.

RE: What the hell.
By StevoLincolnite on 5/10/2011 10:41:45 AM , Rating: 2
The difference with say... Facetime and something like Skype is the video and Audio quality.
Compression, resolution and other such things contribute to how demanding it is to make a video call.

So with that in mind... Video calls via an iPhone or Android device will be far less demanding on the host machine/network than one that is on PC. - Because to put simply a Phones video call function is inferior quality wise because of the limitations in hardware and bandwidth.

RE: What the hell.
By StanO360 on 5/10/2011 11:24:22 AM , Rating: 2
Skype is well within the realm of most pc users. Most just don't do it, or they don't know very many people that want to.

Microsoft can change that, Xbox brings that ability to TV's via 25 million XBL subscribers (or more just through connected XBoxes. Plus, you know a corporate Kinect is not far away. I can easily call a PC, phone or XBox with Skype, I like it.

RE: What the hell.
By Smilin on 5/10/2011 7:23:54 PM , Rating: 2
The corporate "video kinect" already exists in the form of the MS Roundtable. Skype to Lync will bring them together.

This is good news for the consumer and Skype customers.

RE: What the hell.
By Smilin on 5/10/2011 7:26:32 PM , Rating: 2
Actually Skype is already pretty locked down. I believe they'll license their proprietary codec but I haven't heard of an API.

MS on the other hand uses industry standards, follows RFCs, and has great APIs.

I expect getting skype "open" will be an early priority...with MS other products first in line to take advantage.

RE: What the hell.
By Gzus666 on 5/10/2011 9:54:08 AM , Rating: 2
I have to question number 3. What routers are creating errors? For simplicity's sake, the router is just forwarding a packet and the only thing it usually does with it is a CRC check, a table look up and a layer 2 header rewrite. I assume you mean line problems creating errors or something to that effect, cause routers really don't do anything to the packets.

Also, packets don't really get lost during transmission, they usually just get dropped due to buffer overflows on an input queue (whether that be hardware or software). Sometimes you get a black hole due to a route dropping and the router dropping the packets till the new route converges (relatively rare).

RE: What the hell.
By StevoLincolnite on 5/10/2011 10:36:56 AM , Rating: 2
I assume you mean line problems creating errors or something to that effect, cause routers really don't do anything to the packets.

Should have clarified point 3 better than I did, but you are correct.

Also, packets don't really get lost during transmission, they usually just get dropped due to buffer overflows on an input queue (whether that be hardware or software).

Actually, packets can get lost in transmission.
What I mean by "Transmission" is the sending of data from one machine to another over an internet connection.
Those packets can get sent through dozens of different routers located along the way to the recipients machine.

What happens if: The router has a heavy load that it cannot handle? Has a fault? Or some other problem? The packet obviously can't get through or processed, so it's deemed "lost". (Dropped is just another word for it, semantics.)

Also if you ever do a 'ping' in command prompt, at the end of the ping it will give you a percentage of the packets: received, sent and lost.

RE: What the hell.
By Gzus666 on 5/10/2011 10:49:41 AM , Rating: 2
I figured it was probably a clarification issue, just struck me as odd.

Usually router CPU load isn't an issue, as most things on carrier routers are done in hardware. The packets are rarely punted to the main CPU as this would slows things tremendously. The buffering issue is usually the only real problem as you are hard pressed to find real faults in carrier grade networking equipment.

A lot of reachability issues that you see with PING are caused by link/route flaps which usually stem from faulty lines or ports. ICMP packets are quite small and usually don't run into buffer issues. Another fun problem that can cause random packet drop is when load balancing is used and one of the paths is dead down the line, but no local indication is seen so the path is still used as if it were up. This is where things like SLA tracking are helpful as you can assign weights to links based on SLA and if a link goes down, you can pull the path out instead of having some traffic black hole.

There is a lot more to it and I won't bore you with the details, but networking is a wild world now as there are so many methods to route, balance and buffer.

Full disclosure: I am a core network engineer for a carrier, so I have to plan and design around this sort of stuff.

RE: What the hell.
By Smilin on 5/10/2011 7:37:09 PM , Rating: 2
If you're a core engineer you're probably leaning more towards the Juniper side right?

Only thing I've seen with routers causing VoIP issues is with Cisco. They have a "sip fixup" feature on their VPN concentrators and some other routers/switches that just utterly mauls SIP traffic. Cisco has like 4 different implementations of that protocol depending on which product you use. All of them show age the moment any 3rd party interoperability is attempted.

Few products use SIP over TCP now so the problem is fading on it's own. You can't maul stuff encapsulated in TLS.

Agreed on ICMP.. you gotta kick up the packet size to find BH routers and latency/loss. Fun trivia: checkout what PING uses for a payload in larger packets. :)

When it comes to VoIP though the absolute #1 factor in call quality is the sound device used. You can run SONET over fiber to your house and still not compensate for a crappy microphone.

RE: What the hell.
By Gzus666 on 5/10/2011 8:54:53 PM , Rating: 2
Pure Cisco, transport and all. I haven't really touched the Juniper stuff, but I know it is pretty nice. Cisco still has a hefty margin in the carrier space, you'd be surprised who runs Cisco all over. Only carrier I know of off hand that runs Juniper is Level 3.

The fixup was an issue on the old code, that has been gone for a long time. Fixup was the PIX version of the current inspection that is used in the new code. The new products work fantastically actually, the SIP inspection is very robust on IOS and ASA code. The whole firewall inspection change is quite robust, being able to just inspect ISAKMP and it will pass all related traffic for IPSEC, really nice stuff.

If you see the 8.4 ASA code and the new 15.1 IOS code, they are very similar now. Cisco really made some great changes with the ASA product line. I have had very few issues with anything Cisco on recent releases. The packet tracer feature they added to ASA code is awesome.

I dislike voice for the most part, so I stay away from it. I enjoy QoS setup and queuing, but bits are bits as far as I am concerned, I just move them around.

RE: What the hell.
By Smilin on 5/11/2011 3:01:47 PM , Rating: 2
Might be the wrong guy to ask since you stay away from voice but do you know if SIP fixup supports extensions now?

Kindof a moot point with Lync at least. It no longer supports unencrypted TCP for clients.

RE: What the hell.
By Gzus666 on 5/11/2011 5:35:16 PM , Rating: 2
Not a clue, you are better off using the policy map with inspection now. I believe they introduced that in the 7.x train. Funny, cause I'm setting up an ASA right now, ha.

RE: What the hell.
By Gzus666 on 5/10/2011 10:58:29 AM , Rating: 2
Fun side note if you are interested

You can log into core looking glass route devices and see all the Internet routing tables. If you click on the AT&T one at the bottom, you can drop into one of AT&T's 7206VXR routers and play with command line. You will need a telnet program like putty.

When you get in, you can run commands like "sh ip route" or "sh int" to see some of the stats (without the quotes of course). You can also do "ping" and "trace" if you wish. You can see how long routes have been up, things like that. You are pretty much free to fiddle with it as you don't have enable mode, so you can't do anything dangerous with it.

GigabitEthernet0/1 is up, line protocol is up
Hardware is BCM1250 Internal MAC, address is 000c.cf58.141b (bia 000c.cf58.141b)
Internet address is
MTU 1500 bytes, BW 100000 Kbit, DLY 100 usec,
reliability 255/255, txload 1/255, rxload 1/255
Encapsulation ARPA, loopback not set
Keepalive set (10 sec)
Full Duplex, 100Mbps, RJ45, media type is RJ45
output flow-control is unsupported, input flow-control is XON
ARP type: ARPA, ARP Timeout 04:00:00
Last input 00:00:00, output 00:00:00, output hang never
Last clearing of "show interface" counters never
Input queue: 1/75/335/0 (size/max/drops/flushes); Total output drops: 4
Queueing strategy: fifo
Output queue: 0/40 (size/max)
5 minute input rate 36000 bits/sec, 41 packets/sec
5 minute output rate 26000 bits/sec, 31 packets/sec
52857002 packets input, 1209106163 bytes, 23 no buffer
Received 8496789 broadcasts (0 IP multicasts)
0 runts, 0 giants, 86 throttles
1 input errors, 0 CRC, 0 frame, 1 overrun, 0 ignored
0 watchdog, 3685787 multicast, 0 pause input

There is an example of the output, you can see some packets got dropped from the buffer (queue). It is pretty minimal considering the sheer amount of packets going through, but it happens here and there.

RE: What the hell.
By Smilin on 5/10/2011 7:40:28 PM , Rating: 2
May I suggest:
Windows Live Mesh, Skydrive, and the Live mail client.

Mesh in particular rocks.

RE: What the hell.
By damianrobertjones on 5/10/11, Rating: 0
RE: What the hell.
By icanhascpu on 5/10/2011 7:14:41 AM , Rating: 2
I'd love to know. Same people, different application, vastly better performance. Hard to make more than a few logical assumptions, y'know?

RE: What the hell.
By StanO360 on 5/10/2011 11:27:25 AM , Rating: 2
I can call my nephew in China and get a doable image over some crap Chinese connection, same with cousins in Kansas over low rate DSL. Cable broadband relatives come out very well.

"Nowadays you can buy a CPU cheaper than the CPU fan." -- Unnamed AMD executive

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