Microsoft could charge for Skype video archiving and authentication

Microsoft may charge business users for Skype video archiving and authentication, but keep the base consumer video service free, according to one high-ranking company executive.
Written by Mary Jo Foley, Senior Contributing Editor

How Microsoft plans to make money from Skype is a question many have asked since Microsoft announced intentions back in May 2011 to buy the VOIP vendor for $8.5 billion.

Microsoft execs themselves have been pondering the issue, too, though they've given few concrete clues about their intentions.

On December 6, however, Charles Songhurst, General Manager, Corporate Strategy (and the guy who supports Microsoft top brass in analyzing large merger and acquisition transactions, noted during a Q&A session at the NASDAQ OMX Investor Program event in London, did provide a bit of guidance.

Core video chat technology between individual consumers will likely remain free, Songhurst indicated. But some of the Skype video technologies with more corporate appeal -- say, capabilities like archiving and authentication -- may not.

Here's a transcript of Songhurst's answer to an attendee's question about Microsoft's Skype strategy, going forward:

"E-mail is a good analogy to the video business. So, if you look at the e-mail industry, the consumer e-mail business has always been one where the core products are given away for free. So, you look at Hotmail and its competitors like Yahoo and Gmail, and then you look at the business side of e-mail. You look at Outlook and you look at its competitors. That's always been a very good and very profitable business for Microsoft.

"You're going to see the same dynamic in video where consumer video conversations have the same dynamic as consumer e-mail.  It's a product that is free, and it's likely to stay free. In the enterprise you've got a very compelling opportunity around archiving and authentication. There's a stat that's approximately 29 percent of Fortune 500 employees use Skype without it being installed from their CIO. So, if you think about giving the CIO the ability to archive those conversations, to authenticate them, to have the same controls over that conversation that they do over their e-mail, that the employees have, you'd have a very compelling proposition."

(Songhurst, by the way, is considered to have been CEO Steve Ballmer's right-hand man in the Skype acquisition.)

Microsoft execs have said they plan to integrate Skype throughout Microsoft's product line -- everywhere from Hotmail and Xbox, to the company's Lync unified communications server/service and Windows Phone. (A Windows Phone Skype client was on Microsoft's 2011 delivery list, but still has yet to materialize. I wouldn't be surprised to see this pushed back to 2012.)

One other interesting tidbit from the transcript of Songhurst's December 6 remarks: Even Microsoft's highest-ranking and most influential execs are forbidden from saying almost anything about Windows 8. They can't even restate or refine Windows 8 information that's already been shared by the Windows client team.

Songhurst told attendees that Windows 8 was the topic he could say the least about "because we're very careful in what we say about Windows 8."

"(W)e really don't talk about Windows 8," Songhurst repeated when asked another question which touched on the topic.

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