Why Is Microsoft Buying Skype?
Internet telephony company Skype is almost eight years old now – probably older than most people imagine and it’s one of the legendary dot coms which doesn’t really have a business model. Developed by Kazaa collaborators Ahti Heinla and Jaan Tallinn, it uses the internet protocol (IP) for voice calls, video calls, file transfers and the like. It’s phenomenally popular (660 million user accounts) but has never found a way to make proper money. Everything is free unless you want to call a landline or mobile phone from it in which case it costs a small amount.
So back to the title and why do Microsoft want to pay $8.5 billion for it? In October 2005 Ebay paid $2.5 billion for Skype, couldn’t find a way to integrate it into its online jumble sale or to make any money from it via any other method. Investment group Silver Lake bought Skype from Ebay for a bit less than $2 billion and yesterday completed the deal of a lifetime by selling it onto Microsoft.
Early statements by Microsoft talk about the need to integrate Skype into existing services such as Xbox Live, Kinect, Office, and Windows Phone – fine but not really $8 billion worth. They also reassure users of other platforms – Linux, Android, Mac OS etc – that there will continue to be support for those versions. Here’s the odd thing though – Microsoft already has Windows Live, it can do everything Skype can do (except call landline/mobile numbers) and it has many more users. Are they going to ditch that? Can’t see it.
Microsoft may see a future with its Windows Phone. If you can’t crack the telecoms market or even compete with Apple (iPhone) and Google (Android), then why not integrate Skype onto your device and offer free or very cheap calls to other users to gain a foothold. It’s not a bad plan but the telephone networks would hate it and they are the ones which still control the networks and therefore access to VOIP services.
So we are left to wait and see what Microsoft’s plan is and to hope that they don’t ruin or restrict Skype for those of us who rely on it in various corners of the world. Maybe they just bought a gigantic database.