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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What the hell.
By icanhascpu on 5/10/2011 1:05:04 AM , Rating: -1
Jesus Christ, please do not let your shitty MSN Live team touch Skypee. MSN cant do one fucking thing correctly without having a fit. Video? 2 FPS on a 50Mb pipe using 80% CPU. On Skype? 30fps using 10%CPU.


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.

"Young lady, in this house we obey the laws of thermodynamics!" -- Homer Simpson

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