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We probably mostly agree that Microsoft paid too much- it gets eBay out of Skype with a profit, but now what? What can Microsoft get that they couldn't have without buying Skype? A deal with windows mobile 7? They could have had that. Technology? I really don't think so. I am confused by what values Microsoft sees other than a popular new venture in a time when they don't have too many. Xbox is the best thing they have done lately. I guess at this price they don't have to worry about competition.
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From Microsoft's perspective, it gets several things.
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Noreen, I wonder how much of it was no. 4. And instead of a ha-ha at google's expense, how much is it strictly a defensive play? Though that is a lot of money to pay to prevent competitors from getting a company that's never made money.
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Must be hard having billions of dollars overseas -- and nothing to spend it on!
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"Microsoft and Skype will define the future" of integrated communications
Just wondering if this move will have rub-off effect on Nokia shares as well, because having skype feature on win-nokia mobile will definitely give advantage to "Win-Nokia" mobile. User Rank
Platinum NO RATINGS
I wonder if beating out Google is worth $8.5B? Maybe it is time to give Balmer the boot and get someone with Vision in the company. Balmer has had no big successes in his 10 year rein with the possible exception of XBox. They are losing big time in the mobile arena and in portables and it is starting to show on the bottm line. You can't keep doing the same things and keep expecting different results.
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I listened to the press conference Ballmer held yesterday and I was struck by only one thing: I never heard anyone use the terms innovate and innovation more than he did in such a short time. So in the words of Shakepeare,"Me thinks he doth protest too much."
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Blogger NO RATINGS
Well, I have to agree with you there. I actually started counting the number of times he said it!
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Platinum NO RATINGS
I'm intrigued by the forecast that Windows Phones are gaining so much market share. Do you know more about that research?
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The latest projection for 2015 is by Pyramid Research, which projects Windows Phone will be the leading platform in 2015. IDC released a similar projection in late March, which had Windows Phone second to Android. Pyramid Research sees Android in the lead for a few years, but thinks the Microsoft platform will surge ahead by 2015, aided by the Nokia partnership.
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It will be interesting to see how Microsoft re-energises their smartphone business. Apple will hold its own because of the great way it packages end to end, its growing applications list and its very good ease of use. Android seems to be growing the fastest. If Android can continue to grow their marketplace for applications and fix some of the issues like security, they will continue to grow. Nokia has not done well recently versus Apple and others like Samsung. So will be interesting to see this play out for Microsoft.
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I will take these analysts' report as a grain of salt. The trend was already set for smartphone, two platforms are too many for most software developer, and another platform, noooo way.
In the past Microsoft usually killed the competition by offering second rate product with lower price, or sometime free. But with Apple's firm grasp on high end user, and Android's spread from top to low tiers. There are really not much space left for Windows Phone. Especially considering Nokia needs one more year to come out with any meaningful window phone. I would bet the Window Phone will end up like Zune, especially when Balmer remains to be the CEO User Rank
Gold NO RATINGS
Looking forward to MS ruining Skype, as MS inevitably will, so that an even better form of communication comes along. This seems to be the cycle: Entrepreneur creates new product/service, entrepreneur gets investors, investors cash out to some big company that has no idea what it's buying, big company slowly destroys the product/service while another entrepreneur fills the void. I wish it was more like building on the shoulders of others but it's more like standing on their bones.
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As a paid Skype customer, I can testify that Skype WAS a great service, but the call quality has been degraded consistently after being acquired by private equity firm 18 months ago.
We all know what a private equity firm will do with the new acquired company, loading it with debt, cutting off the fat, and milking the company as hard as it can. Finally I guess it cuts into the muscle and bone of Skype. Hope Microsoft will not add another layer of bureaucracy on Skype, otherwise, we shall expect the beginning of an end.  User Rank
Iron NO RATINGS
Skype can help bridge the gap between Microsoft and several consumer electronics manufacturer. TV manufacturers such as Samsung and Panasonic has introduced Skype capabilities on their HDTV models as early as last year, now Sony has joined the bandwagon. Sony TVs that are connected to the internet enables Skyping functionality on the Bravia Internet TV portal. Logitech TV Cam offers Skype video conferencing with Panasonic TV sets. Skype is the cheapest and easiest video conferencing option, which will likely require the least amount of new equipment. This will help Microsoft better compete with Google (Google Talk) and Apple which also offers video chatting for its MacBooks and iMacs.
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Most analysts think this acquisition was defensive rather than offensive. Microsoft already had a lot of the technology and products to do this. However, I think with Skype they get a customers base and probably some innovative people who can help them move foreword faster in this space. They also get a relationship with Android and this should be interesting.
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I would say that all your points are right on; however, i fear that microsoft will not be able to keep the buzz around Skype that it has had in the past. My biggest fear is that Skype will be lost in the vast forest of MS products, I think MS still has a long way to go before they are operating in a way that would allow them to get the most out of this....
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Iron NO RATINGS
Even though Microsoft is sitting on hordes of cash, 8.5 billion is not exactly chump change to throw away on useless application or to keep competitors from getting it. I find it hard to believe that Microsoft could have made the decision to buy Skype without a solid business case on how to monetize the investment. But then again maybe I think differently from the highly paid strategic decision makers who make millions in compensation… J
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If you listen the what Balmer had to say, he kept using the word startegic without any business case put forward. Having lots of customers that don't pay anything is not easy to build a business case on.
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There's something to be said for buying something now under the assumption that you're smart enough to figure out what to do with it later, right? Just listening to Balmer gives me that gut impression.
Two interesting stories I came across today: one warning skype customers to expect more ads coming soon. The other from an analyst who said that there were no other legitimate buyers... So if MSFT bought for defense, they might have been duped.
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Iron NO RATINGS
It's probably a good move for Microsoft but at 8.5 billion, I think they paid too much and so will have to charge for the service.
 User Rank
Gold NO RATINGS
I sincerely hope that will not be the case. If they start charging they would loose most of the customers who have been using skype to other competitive services. I also think they might start putting advertisements after all what they spent was a hefty sum.
I feel that the skype call quality has really gone down during the past one and a half years. I hope it does not further deteriorate. User Rank
Platinum NO RATINGS
Howwill they make money if they don't charge? Will they continue to support all the platforms besides Windows mobile? I can't imagine that they will not try to give themselves some sort fo advantage and that will kill the goose in my opinion. I just do not see many ways they can ever make money without seriously hurting the business.
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Don't forget that MSFT often has a deeper strategy than just revenue. Remember when they tried to get all the book stores (e.g. Borders, etc.) to use a single login password service for the convenience of customers? That meant that MSFT would then have all those customer lists! Imagine what they could have done with those.
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Silver NO RATINGS
is what Microsoft is trying to achieve by purchasing Skype. The popularity of it is immense, and I perceive that it will only get bigger. Good Job Mr. Gates!
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Platinum NO RATINGS
Instead of arguing what price Skype should fetch, maybe we can look at this another way. let's say Mr. Balmer would give you a budget to hire 1000 people ( many more than Skype has) and pay them an average of $200K/yr , so you can insure you will get really good people. You then get an operating budget of say 3 times that- $600M/yr. Your charter is to build a mulit-platform telecom product that is easy to use and largely free to users. You spend time to make it great quality, easy to use on any platform, you integaret as a plug in to gmail, Yahoo, Outlook, Blackberry, etc. You have 5 years to get as many users as Skype. Then you give another $1 Billion or so for any licensing you need to do. In the time period you will spend 1/2 of what MS paid for Skype and IF you hired a few of the right people you would meet or exceed the goal.This apporach makes a lot more sense to me than what was done.
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You are right creating their own communications platform might have been cheaper. But then again it would have taken them over 5 years to get there. May be they thought time is money. And with the technological changes that take place every day they might have been tempted to get what was already made rather than developing it themselves so that they can have the latest in technology along with the customer base.
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Platinum NO RATINGS
To me, the issue is whether Microsoft can not only integrate Skype but also gain some of the cachet the phone service provides. Microsoft struggles to be as cool as Apple. Could this give them an edge with users who feel the firm is just too stuffy to understand their needs? Or will the users just turn to a new alternative?
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