What Microsoft's Skype deal means

What Microsoft's Skype deal means

Summary: Microsoft nets a powerful consumer brand, another cloud service to sell, and an opportunity to provide managed B2B video, blogs Ted Schadler.

SHARE:

I'm not going to comment on the $8.5B purchase price, though I'm sure Marc Andreesen's investment company is happy with their return. And I'm not going to comment on the impact on Xbox, Hotmail, and Live.com. And I don't think this has anything to do with Windows Mobile.

But I am going to comment on the impact of the deal on the enterprise, and specifically on content and collaboration professionals responsible for workforce productivity and collaboration. When you strip it down to its essence -- Skype operating as a separate business unit reporting to Steve Ballmer -- here's what you need to know about the Skype deal:

First, Microsoft gets an important consumerization brand. Skype is a powerful consumer brand with a reported 600+ million subscribers. But it's also a "consumerization brand," meaning that it's a valuable brand for people who use Skype to get their jobs done. Consumerization of IT is just people using familiar consumer tools to get work done. It's a force of technology-based innovation as we wrote about in our book, Empowered: Unleash Your Employees, Energize Your Customers, Transform Your Business. Google and Apple and Skype have dominant consumerization brands. Microsoft does not. Until now. And as a bonus, Google doesn't get to buy Skype. And more importantly, neither does Cisco.

Second, Microsoft gets another cloud service to sell. Microsoft's software revenues are under attack. That's one reason has built Office 365 and Windows Azure. While it's true that Skype has been slow to make money off its service, the potential is there. Local phone numbers, three-way video conferencing, business administration, and making calls to real phone numbers are all things that people will pay for. Skype has never had the money to market these services. Microsoft does.

Third, Microsoft gets the opportunity to provide managed B2B video conferencing. Microsoft's Lync product delivers audio and video and chat and Web meetings, but only to other other employees or close partners. But with a managed gateway between Skype and Lync, people could use Lync-to-Lync to connect to colleagues and Lync-to-Skype to connect to customers and partners with video, audio, and chat. "Can't I already do this today with Skype" I hear you ask. Yes, you can. But only if IT looks the other way. With a Microsoft-sanctioned solution, IT could sign off on the practice.

Topics: Enterprise Software, Collaboration, Microsoft, Software, Telcos, Social Enterprise

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

26 comments
Log in or register to join the discussion
  • Skype-Windows is built using Delphi

    So wonder what MS will do to that. Delphi, as you know is a real compact platform where you can create fully contained static EXEs with very small footprints easily. The operative word is easily, as you could do the same with VC++, but not easily. Also, have to see what they do with it. Remember Danger OS (running on Sidekick) which morphed into the OS for the Kin? Remember how they bought Foxpro and made an elephant out of a fox?
    GoForTheBest
    • Yea, there will be a lot of different ways that Microsoft can screw this up

      and turn it into another Kin. What will they screw up first?
      DonnieBoy
      • RE: What Microsoft's Skype deal means

        @DonnieBoy

        They will make it a .NOT application and destroy cross platform, forcing the open source community to duplicate the functionality.
        BrentRBrian
      • RE: What Microsoft's Skype deal means

        @DonnieBoy,<br><br>What does this have to do with Kin? Nothing. Go see a shrink, get a life.
        bmonsterman
      • RE: What Microsoft's Skype deal means

        @BrentRBrian
        ".NOT Application"
        Microsoft doesn't make many .NET applications. People would be able to easily see the IL, and pretty much see their source code. Obfuscation tries to stop this, but it doesn't really fix it.

        The only thing making .NET not cross-platform is the lack of essentially a ".NET Framework" for other platforms (yes, there is Mono, but that doesn't support all the features...).
        Existing .NET Applications would work fine on ARM, without needing to be re-compiled to IL code. They would just be JIT Compiled at runtime on the ARM platform to produce native machine code for ARM.
        xnederlandx
    • RE: What Microsoft's Skype deal means

      @iRMX I'm glad you mention about Delphi. You know, most of the key persons, i.e. Anders Hejlsberg, Danny Thorpe etc., who designed Delphi is now working in Microsoft.

      Take Anders Hejlsberg for example, he's the lead architect of C#. Even more interesting is Danny Thorpe is responsible for Windows Live... Hey if Microsoft can turn that Virtual PC mouse into Hyper-V, it's impossible to see that they can turn Skype into something big.

      Danger OS, I think, is something different as it was designed by ex-apple employees and the software was based on NetBSD/JAVA philosophy. Did you know what happened after the data lost? They left and many of them joined Android where the founder of Android was also the founder Danger, Andy Rubin.
      Samic
      • RE: What Microsoft's Skype deal means

        @Samic "Microsoft doesn't make many .NET applications."??

        No offense intended here, but MS has many varied applications/subscription services. .NET is no longer the moneymaker it was because of MS"s move to forcefully obsolete and force full cost "upgrades" upon their users that a little of the .NET (not all by any means) has stopped growing and is slowly now lessening. There are/were many, many designers out there who were forced to either abandon their single-sourced applicatioins or go out of business. There are still many trapped in the MS-lock and who if they need to remain in business aren't likely to ever be able to leave MS. Many of the .net apps are absolute tie-ins with no other means of replicating them due to MS contracts, EULAs and obnoxiousness. I was one of the first IMO to be displaced by MS. Never again!
        tom@...
  • Well, if you don't talk about the purchase price, or how they will

    integrate, or how they will convert it all to run on Windows server, you have not said much at all, other than the obvious.
    DonnieBoy
    • I am afraid that was essentially ....

      @DonnieBoy

      my reaction too. The price in particular matters a GREAT DEAL, except of course when you can spend someone else's money to try to shore up your sinking business.

      Maybe MS should just milk its cash cows for all they are worth, pay the shareholders everything and let THEM decide how to re-invest the funds. That might be a lot better, but will not suit Ballmer's ego of course.
      Economister
      • RE: What Microsoft's Skype deal means

        @Economister
        Question: Are you invested in Microsoft??
        eargasm
  • Funny

    Skype, never having made any money, will be welded to Microsoft's online services, which hemorrhage cash. Perfect.

    Welcome to Dot Bomb 2.0.
    His_Shadow
    • Well, Skype HAS made a lot of money for INVESTORS. It was not long ago that

      Skype was worth less than a billion . . . . Pretty funny.
      DonnieBoy
  • More room for other players

    Now that the much unloved Microsoft has control of the most used VIOP platform, three things will happen; excitement for development will die, cross platform efforts will die, and a renewed interest VOIP from telecoms and other software companies will be reborn.
    hahobson
  • You've been warned long ago

    You've been warned long ago that if you're so stupid to tie your as* to the propitiatory program, then don't complain when they screw you up<br><br>Support development of Open Source VoIP clients!<br><br>e.g. <a href="http://www.gnutelephony.org/index.php/GNU_Telephony" target="_blank" rel="nofollow">http://www.gnutelephony.org/index.php/GNU_Telephony</a>
    http://planet.gnu.org/gnutelephony/?p=14
    linuxoid
  • Message has been deleted.

    Just True
    • Message has been deleted.

      dkerber@...
  • Message has been deleted.

    linuxoid
    • Message has been deleted.

      jackbond
  • RE: What Microsoft's Skype deal means

    It means one more nail in the coffin of Yahoo! Messenger.

    When I was deployed, Messenger worked better for me than Skype.
    William_P