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.

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

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.

"If they're going to pirate somebody, we want it to be us rather than somebody else." -- Microsoft Business Group President Jeff Raikes

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki