Microsoft buys Skype, so what happens next?

Microsoft buys Skype, so what happens next?

Summary: Microsoft landed Skype in an $8.5 billion deal closing later this year. We shouldn't worry about the free service going away. Here's what Microsoft is likely to do with Skype.

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After months of speculation about who would buy it, Skype finally has a new home. Microsoft swooped in at the last minute and nabbed Skype for $8.5 billion in cash, the largest acquisition Microsoft has ever done.

A lot of people are concerned about the future of Skype at this point since Skype has always embodied the grassroots ethos of the Internet by allowing users to do free voice and video calls to anyone on the planet using its peer-to-peer protocol and software. Now, Skype is owned by one of the world's largest corporations, which we'd think would want to use it to draw more money out of the half billion Skype users around the world.

Microsoft CEO Steve Ballmer and Skype CEO Tony Bates shake hands. Photo credit: Harry McCracken |Technologizer

While Microsoft has rocky history with acquisitions, I don't think we should be too concerned about the company destroying Skype or changing it from a free service to a paid service, and I'll explain why.

First and foremost, Microsoft knows that it bought a consumer service that is loved by the public, and a most of Skype's value is based on the huge number of users it has. Turning Skype into a paid service would immediately shrink the user base and decrease the value of the property. That's the business reality of the situation.

Second, Microsoft plans to make Skype an independent business unit within the company, with Skype CEO Tony Bates as the head of the division. That's a good sign that Microsoft plans to invest in Skype, do a lot more with it than just the stuff we've seen so far, and turn it into a larger platform rather than just a voice and video service. For more on that, let's take a quick look at what the chiefs had to say about the deal:

Microsoft CEO Steve Ballmer said, "Skype is a phenomenal service that is loved by millions of people around the world. 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."

Skype CEO Bates said, "Microsoft and Skype share the vision of bringing software innovation and products to our customers. 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."

That definitely sounds like there are already plans for growing and expanding Skype, which has been languishing for years with minimal new features and product development. With Microsoft's resources behind it, there's the potential that Skype could be unleashed to start innovating again.

In terms of Skype remaining free, remember that Microsoft has been running its Messenger for years (under various names such as Windows Live Messenger and MSN Messenger) as a free service. The big question there will be whether Microsoft converts Messenger to Skype to turn it into an even larger pool of users to compete more effectively against Yahoo Messenger and GoogleTalk.

The other big question is about Skype's multiplatform support. Skype has traditionally released the newest features and updates for Windows first, but has also maintained versions of its client for Mac and Linux, which eventually get the latest features after a few months lag time. In its official release about the acquisition, the company stated, "Microsoft will continue to invest in and support Skype clients on non-Microsoft platforms." However, I'd expect Microsoft to continue the Windows-first tradition and not unify the development of the three clients (which we might have gotten if Google had bought Skype).

Bottom line

Microsoft is likely to keep the status quo with Skype's current consumer service, with only minimal changes. Meanwhile, on the high end, Microsoft will work on building a business communications platform with Skype by making it a corporate unified communications platform that is tightly integrated across Microsoft's business software, servers, and services.

At the Skype press conference, Ballmer said, "We dream about experiences that are not limited by distance or device."

Think of being able to securely IM a document directly from Microsoft Office to a Skype user on the other side of the world on a smartphone, or being able to use your Skype client to dial into a corporate telepresence system when you're on the road. Those are types of things Skype has been capable of for years but hasn't delivered on, and I expect we'll see Microsoft focus on those opportunities.

Also read

This was originally posted on TechRepublic.

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

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24 comments
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  • RE: Microsoft buys Skype, so what happens next?

    A lot of users are voicing their concerns over this acquisition. Microsoft's purchase of Skype can do quite a lot for both companies. It will get Skype on more devices, and it will get more people to use it. I especially like the xbox/kinect idea with Skype. Microsoft has a number of communication applications that could take advantage of this deal.
    LoverockDavidson
    • RE: Microsoft buys Skype, so what happens next?

      @LoverockDavidson What device is Skype not currently on which MSFT will get them access to, other than maybe waving one's hands at Skype-on-Kinect?
      spark555
    • RE: Microsoft buys Skype, so what happens next?

      @LoverockDavidson

      Can also be a tool to compete with Apple FaceTime
      minardi
  • 2 turkeys don't make an eagle

    Skype and M$ live were losing money before, will bleed twice as much now!<br>In the meantime people have been moving to google products.
    Linux Geek
    • Eating crow...

      @Linux Geek?
      Stark_Industries
    • Losing money?

      @Linux Geek
      MS can be justly called many things, but not unprofitable. Admittedly, they have a lot of money losing businesses, but they still make lots of money on Windows, Office, and Visual Studio.
      John L. Ries
      • He said Microsoft live

        It's like saying Android is losing money for Google It might be true, I'm not sure, but it isn't affecting their overall revenue much.
        Michael Alan Goff
  • Small correction: &quot;Cash&quot; is **not** used in buying Skype

    Actually, it is going be transfer between banks with no cash at any stage at all.<br><br>This use of "cash" reminds me of use of word "football" in USA -- when people do not actually play with ball (melon-shaped thing is used), and they do not play it with feet.
    DDERSSS
    • RE: Microsoft buys Skype, so what happens next?

      @denisrs Didn't you see the video cast? Ballmer was still sweating after moving the boxes of cash into the back of Tony Bates's minivan.
      Stark_Industries
  • RE: Microsoft buys Skype, so what happens next?

    The bottom line doesn't sound all that bad. Sounds like Office just one upped the competition. Why are people so against this? <img border="0" src="http://www.cnet.com/i/mb/emoticons/wink.gif" alt="wink"><br><br>Seriously, if Sype was bought out by any other tech firm, we wouldn't be hearing the end of what a great acquisition it makes.
    The one and only, Cylon Centurion
    • Why are people so against this?

      @Cylon Centurion 0005 Because Skype is a platform that has embraced a wide variety of platforms: Windows, Mac, Linux, iOS, Android. With a platform company taking over Skype, one fear is that the non-Microsoft platforms will become second class Skype citizens or be dropped altogether, keeping Skype from being the nearly universal communication tool that it is now.

      Yes, Microsoft has promised to continue support of non-Microsoft platforms. But will they actually do so, will they expand that support to additional non-Microsoft platforms, and will those platforms get feature and performance parity? Microsoft's past record does not suggest that good things will happen.
      mark@...
      • RE: Microsoft buys Skype, so what happens next?

        @mark@...

        Microsoft does have a Mac business division. Linux is no loss however, since I'm assuming because Skype isn't open source, Linux lovers wouldn't use it.
        The one and only, Cylon Centurion
  • Cry havoc and let loose the microserfs!

    As in the all those who are about to get shuffled/downsized etc in the wake of this. Not to mention the inter-division spats that will no doubt arise. Maybe someone should make a new soap opera based on this.
    ego.sum.stig
    • or maybe not

      @ego.sum.stig@...
      maybe it'll be business as usual.
      Bill Pharaoh
  • RE: Microsoft buys Skype, so what happens next?

    What was good becomes proprietary and a Failure.
    minardi
  • I'm leaving skype

    now the big gobble gobble took over... people run and make skype make a deadly dive.
    shan1950
  • RE: Microsoft buys Skype, so what happens next?

    Oh crap. Skype is gonna die =[
    guildwarsguy123
  • Not Visual Studio

    Not a bad return on what started out as a Delphi application and on Windows still is.
    davechampion@...
    • Was unaware

      @davechampion@...
      One point for the Pascal geeks. That means MS will need to rewrite the Windows client from scratch.
      John L. Ries
      • Windows Re-write

        @John L. Ries maybe as a Dot.net application. Perhaps using the new WinC++. And then rewrite it again in 5 years when the fashion is something else.
        davechampion@...