Microsoft close to buying Skype for $7 billion? Really?

Summary:The Wall Street Journal -- citing those infamous "people familiar with the matter" -- is reporting on May 9 that Microsoft is close to buying Skype.

The Wall Street Journal -- citing those infamous "people familiar with the matter" --  is reporting on May 9 that Microsoft is close to buying Skype.

To quote a Microsoft ad campaign, "Really?"

The Journal says Microsoft is willing to pay $7 billion-plus; The New York Times is saying $8.5 billion to grab the VOIP company that lost $7 million last year. And AllThingsD also is claiming $8.5 billion, and, as of 11:30 p.m. ET, is saying Microsoft will announce the Skype purchase first thing on May 10.

Like Business Insider's Matt Rosoff, I was skeptical that Microsoft might make good on the rumors and buy Skype. I also felt the potential deal (first rumored by GigaOm's Om Malik) made no sense.

For one, Microsoft execs seem to have finally decided that Microsoft's history of assimilating successfully its big acquisitions was a mixed bag (to be generous),  resulting in the company shying away from anything but relatively minor, targeted acquisition in the last two years. Partnerships, like those Microsoft recently struck with Nokia and Yahoo, seemed to be Microsoft's new favored way of getting the technology it wanted without having to buy a company outright.

In addition, Microsoft has spent considerable time and money to build its own voice-over-IP/unified communications platform, known currently as Lync (and formerly as Office Communications Server). Lync is Microsoft's all-in-one VOIP, business instant messaging and audio/video conferencing product.

Microsoft has been touting plans to create Lync clients for Windows Phone 7, iPhone, and possibly Android phones. Microsoft execs have talked up the ability of Windows Live Messenger to interoperate with Lync. They've promised Kinect support for Lync. And they've announced plans to field a Microsoft-hosted version of Lync, known as Lync Online, as part of its upcoming Office 365 launch this summer.

Yes, Lync is nowhere near the household/consumer name that Skype is. But is it worth multiple billions to buy Skype, simply to keep it from Google's or Facebook's clutches?

Maybe the answer to that is yes.

What's your bet? Will Microsoft buy Skype? And should it?

Update: AllThingsD also is saying that Charles Songhurst was key in helping Microsoft CEO Steve Ballmer broker the Skype deal. Interestingly, Songhurst also was credited with helping  convince the Microsoft brass to call off the Yahoo acquisition.

Topics: Collaboration, Banking, Enterprise Software, Microsoft, Operating Systems, Social Enterprise, Software, Windows

About

Mary Jo Foley has covered the tech industry for 30 years for a variety of publications, including ZDNet, eWeek and Baseline. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008). She also is the cohost of the "Windows Weekly" podcast on the TWiT network. Got a tip? Se... Full Bio

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