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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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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.

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