
Microsoft to buy Skype for $7 billion - riordan
http://online.wsj.com/article/SB10001424052748703730804576313932659388852.html?mod=WSJ_hp_LEFTTopStories
======
jsz0
This is Microsoft's ICQ moment. Overpaying for a company at the moment when
its core competency is becoming a commodity. Does anyone have the slightest
bit of loyalty to Skype? Of course not. They're going to use whichever video
chat comes built into their SmartPhone, tablet, computer, etc. They're going
to use FaceBook's eventual video chat service or something Google offers. No
one is going to actively seek out Skype when so many alternatives exist and
are deeply integrated into the products/services they already use. Certainly
no one is going to buy a Microsoft product simply because it has Skype
integration. Who cares if it's FaceTime, FaceBook Video Chat, Google Video
Chat? It's all the same to the user.

With $7B they should have just given away about 15 million Windows Mobile
phones in the form of an epic PR stunt. It's not a bad product -- they just
need to make people realize it exists. If they want to flush money down the
toilet they might as well engage users in the process right?

~~~
netcan
My mother, father, brothers and friends in 3 countries all have skype running
most days. Skype have my credit card so I always have skype-to-phone available
(I use it mostly to find my cell). It's been that way for me for about 7
years. That means I have skype running and I use it every day (but I only
spend about $20 per year). It's not loyalty, but network effects and momentum
count for something too.

Not sure that adds up to $7b (I dunno how to evaluate anything that big), but
it is something. I'm sure this has a big chance of being useless, but it also
has a chance of being helpful.

If in 2 years (assuming skype can keep it's usebase) every windows pc tablet &
phone is connected to skype by default, it could be strenthened. If skype
integrates in some significantly useful way with outlook/exchange (scheduling
calls, confirming meetings, emailing chat sessions, synching contacts) it
could help strengthen the corporate MS position (the real cash cow).

Like many decisions, it's not the decision itself that is most important, it's
the subsequent actions, the execution. That said, a 1m phone giveaway would be
epic. MS have money to burn and big fish to catch. Burn. Catch.

~~~
jakarta
From the estimates I have seen, Skype generates $250mm in EBIT per year.

That would mean that Microsoft is paying 28x earnings. If we want to
approximate EBIT as free cash flows (not the same, but this is back of the
envelope) and assume a 10% discount rate, to break even Skype would need to be
growing EBIT at 6.4% annually for the next 10 years or so.

I don't know how achievable that really is, but maybe they could test raising
prices to get some of that growth.

~~~
riams
That is, if they keep Skype as it is. There are, however, more than just
financial reasons for this acquisition. 2 reasons off the top of my head:

1\. Microsoft will gain from Skype's synergy with their existing portfolio.
Think Skype + Live Messenger or Skype + Windows Phone 7.

2\. Block competitors from purchasing. Microsoft, Google and Apple (to some
extent even Facebook) have businesses that are increasingly overlapping. Skype
in the hands of a competitor becomes an alternative cost for Microsoft.

------
ChrisNorstrom
Goodbye "Skype®", hello "Microsoft Windows Live Connect for Windows Live®"

~~~
boyter
I doubt it. I would hazard a guess that a this is a mindshare acquisition not
technology. It might be branded as "Microsoft Skype" but to drop the name
Skype would be a seriously stupid move, and Microsoft is anything but stupid.
Bureaucratic yes, but not stupid.

~~~
savrajsingh
Foldershare was a good name. What happened to that? :)

~~~
pedalpete
Yup, it became 'Microsoft live sync', oh... what does that do? Lets you share
your folders!

------
trout
Microsoft owns the desktop - that's their cash cow. For large businesses they
(basically) have to buy outlook / exchange. They throw powerpoint, visio,
word, excel on top of that, plus the operating system, and they own it. From
an operating system standpoint, there's not any real threat. From a
productivity suites perspective, there's a bit more threat from cloud, but
it's still comparatively small. Same can be said for email - gmail is a much
larger threat but for corporate security, calendaring, integration, it's still
not really there. This will probably be different in 5 years as the
proprietary protocols and integrations move towards open standards. I find it
ridiculous that I can't find another desktop email client that will natively
work with exchange/MAPI, and Microsoft knows it. Skype is just extending it to
the desktop, and it's a strong part of the desktop suite. I think they want to
play in the enterprise space, because nobody wants to use Lync for anything
other than IM (aforementioned turd comment here).

~~~
bane
_I find it ridiculous that I can't find another desktop email client that will
natively work with exchange/MAPI, and Microsoft knows it._

<http://projects.gnome.org/evolution/>

~~~
trout
Did not know this existed, but doesn't help me since I use Windows

~~~
steevdave
Evolution runs on Windows too. SUSE build system builds it almost daily. Just
google for evolution win32 Email and you should find it

------
mgkimsal
A few thoughts:

When we see the mac version stagnate, we won't be able to say MS has sabotaged
it - skype did that before on their own.

The linux version has never been on parity with the others - will it be
officially killed? Might MS actually put resources in to it to make it work as
well as the others?

Overall, good on MS for doing this. I'm assuming this may bring on some more
interesting dynamics to the google voice / skype party.

~~~
w1ntermute
Don't forget about the Android and iOS apps. No doubt those will be killed off
as well.

~~~
mikecarlucci
Interestingly, if Microsoft does buy Skype and make it Windows only, they
would be opening a huge door for GChat as [EDIT: the obvious] cross-platform
client. FaceTime too, I guess, if Apple decides to move in that direction.

If Skype isn't the default, verbed, system, doesn't it lose some value?

~~~
Sidnicious
On that node, didn’t Apple say, via Steve Jobs at the presentation where it
was announced, that FaceTime was to become an open standard? What ever
happened to that?

~~~
alanh
He did, but that’s the last we’ve heard of it as of yet [last I heard it
discussed]. I doubt they killed it forever though, it’s not like Apple to make
a false announcement (vaporware); it _is_ like Apple to de-prioritize the
speed of open sourcing that stack over developing/improving/iterating their
own implementation and/or iOS ecosystem as a whole.

------
joshzayin
If this goes through, I wonder what would happen to Skype's Linux and Mac
support. I'd hope MS would still support it, but I don't think they have any
Linux software currently (I'm not positive about that, so please correct me if
I'm wrong) and the Mac version of Office is always delayed compared to the
Windows version. I hope Skype doesn't similarly languish.

~~~
william42
I've used the Linux version of Skype. It's rather bare-bones.

~~~
damncabbage
Which is great. It does pretty much everything the Windows client does (chat,
voice, video, desktop sharing), without the big, gaudy, annoying interface.

I fear that it'll just go away, or actively get shut down by compatibility
changes.

(My friends and I practically live on Skype. The one killer feature for us is
persistent chatrooms; it's like IRC, except when I log in I get all the
missing chat history I didn't get while I was logged out.)

~~~
alnayyir
>it's like IRC, except when I log in I get all the missing chat history I
didn't get while I was logged out

What?

screen + irssi + /lastlog your_nick

~~~
damncabbage
1) Four of those friends are not technical, and wouldn't know what to do with
irssi. The remainder are using laptops that get disconnected a lot.

2) I reboot to Windows to play games. There goes the screen session.

3) Skype on iPhones. Seriously. I ain't screwing around with a phone keyboard
and terminal app to SSH in, screen -dR and scroll around just to get back into
a chat.

~~~
alnayyir
I don't use IRC for specific people, if specific people want to speak with me,
they can be-bop into mumble, call my phone, IM me, visit me, email me...I'm
just explaining why the rationale specific to IRC doesn't make much sense.

------
cfinke
Maybe I've missed something, but what has changed in the two years since eBay
spun off Skype at a valuation of < $3B to make it worth more than $7 billion
today?

~~~
mgkimsal
The value of the dollar's dropped.

Not by that much, but it's certainly changed.

That, and ebay never figured out how to monetize it. MS likely has some plans
in place to aggressively make money from it. I'm a skype subscriber, and
probably will continue to be one, assuming they keep at least the same level
of support for Macs.

~~~
cfinke
> The value of the dollar's dropped.

Since the owners are almost all US-based (I think), fluctuation in the dollar
against foreign markets shouldn't have much impact on Skype's pricing. Even
so, the dollar's value against the Euro hasn't hardly changed at all: eBay
announced their sale of Skype on September 1, when 1 USD = 0.7 EUR. Today. 1
USD = 0.6975 EUR.

~~~
prostoalex
> a group of technology investors including Silver Lake Partners, venture
> capital firms Index Ventures and Andreessen Horowitz, and the _Canada
> Pension Plan Investment Board_

~~~
pyre

      Sept 1: 1 USD = 1.05 CAD
      Now:    1 USD = 0.96 CAD
    

Not to mention that the valuation was done in US dollars, and the sale is
being done in US dollars.

~~~
hessenwolf
Valuation currency does not make much difference. As an example, Ebay stock
tends to fluctuate with the eur2usd rate.

------
teyc
There is always a persistent threat of Apple bringing Facetime to the PC
desktop so that people on iPhones could call people with PC.

By purchasing Skype, MS could bring Skype to WP7 and offer it preloaded.

There used to be a time when MS could get traction simply by bundling their
product everywhere. A competitor like Skype would be abandoned simply because
they couldn't outspend MS. Imagine, $7b is a lot of money. You can give away
$1b of free calls to get Live Messenger kick started, or run Lync for free. MS
has lost that swagger that used to create their own reality.

~~~
daimyoyo
That's already happened. When Apple introduced Lion, one of the things they
mentioned was they'd ported FaceTime to the Mac. You get it preloaded with a
new Mac, or it's $0.99 in the Mac app store.

~~~
lurker19
Mac is not a PC. Apple will hesitate a long while before bringing Facetime to
the PC, because Facetime promotes all-important lock-in to the Apple ecosystem
and sells Apple hardware.

~~~
raganwald
I will bet a bottle of single malt that Apple will bring FaceTime to the PC.

I agree that FaceTime sells Apple hardware, but I think the hardware they want
to sell is the iOS product line. Weigh how many Mac sales the will lose if
people can get FaceTime on a PC against how many iPhone and iPad sales they
will make to people who can now chat with Grandma on her PC?

Ubiquity on the desktop and exclusivity on the mobile device are wins for
FaceTime just as they are wins for iTunes.

~~~
MatthewPhillips
Are we talking about the same company? The only time Apple ports their
software to different environments is when they are in a position of weakness
(like they were when they reluctantly put iTunes on Windows). I don't think a
single Apple iOS app has made it's way to Android, or any new Mac software has
been ported to Windows in recent years. You can accuse Microsoft of a lot of
things, but they've always been willing to port their software when there is a
buck to be made (they are a software company after all).

~~~
raganwald
I personally see porting something like iWork very differently than porting
FaceTime. If they think porting FaceTime will help sell iOS devices, I think
Apple will do it for the same reason they ported iTunes. Whereas porting iWork
doesn't do anything for selling iOS devices.

That being said, this is a guess and that's why I said I would bet on it. If I
knew for sure, it would be unethical to bet on the outcome!

------
nikcub
As many users as Facebook, many of those users have entered their payment
details, a great brand that is just as big as Facebook, and synonymous around
the world with communication.

I just happen to be talking to a non-tech computer user on the weekend who
told me that he and his entire family and friends overseas do not use Facebook
because Skype does everything they need in terms of staying in touch and it
has worked for them for years.

They should start over with the software and spin it into a web and mobile
service. It is a great platform to take on Facebook with - a much simpler
service for basic video or text chat, and add in some photo sharing, email,
etc.

Google really missed out on an opportunity here - I bet that whatever they end
up producing internally will not be merely as good or as popular as a new
Skype run by Microsoft.

In terms of the price, it would almost be a worthwhile purchase with just the
users and brand - the near-billion in revenue is just a bonus. Skype has near
$1B in revenue, and most of the expenditure is related to writing down and
amortizing assets as part of the acquisition (something that most PE groups do
when they takeover a company - part of what makes some of these deals
profitable and worthwhile). Number of Skype users and revenue is growing
remarkably. If you look at the published financials[1], $97M was written off
as cost of acquisition, another $250M was amortization of assets that were
written down at acquisition. Their 'real' costs are $131M in marketing, $72M
in development and $104M in administration - which brings gross profit closer
to $500M+ for YE 2011. PE of 17-20 is a bargain, especially considering that
Microsoft can significantly reduce expenditures by integrating the company
into the web group.

I think this is a great deal, very different to ICQ (the immediate parallel
that everybody is drawing) and much closer potential to the eBay PayPal deal.
If done right, this could work out as well for Microsoft financially as PayPal
did for eBay (remember PayPal wasn't doing so well financially at the time [2]
- everybody called that deal crazy at the time as well) - add to that the
potential of Microsoft taking on Facebook in the 'online communication for
ordinary folk' sector - and it is a great,

[1]
[http://www.sec.gov/Archives/edgar/data/1498209/0001193125110...](http://www.sec.gov/Archives/edgar/data/1498209/000119312511056174/ds1a.htm)

[2] <http://www.ygoodman.com/ppipo.html>

~~~
brudgers
> _"As many users as Facebook"_

I suspect that there is a closer correlation to one account = one person with
Skype than Facebook since there is little social incentive to create multiple
Skype accounts. In addition, the strength of relationships between Skype
customers is more easily determined. Finally, Skype has the potential to scale
well into MicroSoft's core B2B business model.

~~~
nikcub
I should have asterixed that with 'registered'. Updated numbers are out now as
part of the msft press release:

<http://news.ycombinator.com/item?id=2532230>

Facebook has 3x active over Skype - but as you mention, while Facebook are
straight-up about their numbers, it is still hard to compare because of
differing methodologies and different app types

~~~
zipdog
I've wondered what impact Zynga has on artificially boosting Facebook's active
user count.

Zynga's games provide an incentive to operate multiple accounts, and counts
about 200m active users, so if only 5% of those users were each running
multiple accounts (say 5 extra), that's around 50m dupe accounts. (I figure
thats an over-estimation though)

Not to mention the other reasons people create dupe Facebook accounts

------
shrikant
TFA talks about how this "could play a role in Microsoft's effort to
turnaround its fortunes in the mobile phone market".

Personally I feel this could be more about Microsoft strengthening its
enterprise communications portfolio. Communicator/Lync is a giant turd, and
this could be their play at Cisco's market, rather than Apple/Google's.

(Incidentally, the Skype chief exec Tony Bates is ex-Cisco)

~~~
Encosia
I must disagree. I've loathed Live Meeting for years, but Lync is stellar. I
_vastly_ prefer a Lync call/meeting to dealing with Skype.

------
jaffoneh
It seems the number might actually be $8.5 billion:

[http://kara.allthingsd.com/20110509/microsoft-will-
announce-...](http://kara.allthingsd.com/20110509/microsoft-will-announce-
acquistion-of-skype-tomorrow-morning/)

~~~
carbocation
NYT's DealBook is concurring:
[http://dealbook.nytimes.com/2011/05/09/microsoft-in-talks-
to...](http://dealbook.nytimes.com/2011/05/09/microsoft-in-talks-to-acquire-
skype-for-8-5-billion/)

------
ashbrahma
That's a pretty good return for the Horowitz + Original founders team who
bought it for $2.75 Billion in November 2010..

------
latch
Weren't we talking about Google or Facebook buying Skype a few days ago at
$1-3 billion? What the heck happened? Insecurities?

~~~
benologist
Faced with 3 awful choices they chose the one with most money.

~~~
fredoliveira
I don't disagree with you as to what happened, but I'm genuinely curious as to
why you think that Microsoft, Google and Facebook are all awful choices.

~~~
benologist
Google has no support, Facebook is staging a war against privacy, and
Microsoft has some pretty meh software outside of Windows (when they bother to
have any version at all).

I guess ultimately MS buying it was not the worst decision - a second-class
client on non-Windows is better than Google not supporting it till the users
give up and they can discontinue it, or Facebook defaulting to telling the
whole frigging world every time you phone someone or sharing your Skype
address with every scabby app developer out there.

But it was really a lame lineup to choose from. I don't know who I'd actually
have liked to buy Skype, but not these three.

~~~
brianbreslin
You are looking at this too much from your viewpoint as a consumer, not skype
viewpoint as a Corp.

~~~
benologist
Of course ... I've been a (paying) user of Skype for years, I don't care about
what's best or least-bad for them as a corporation, I care about me!

------
RuadhanMc
Wasn't part of the problem for eBay that they did not actually own the core
p2p technology that Skype used and instead licensed it from the former owners?
Has Microsoft purchased that as well or are they just going to write their
own? In which case quality will change...

~~~
sunstone
Yes I'm wondering about that too. Apparently eBay didn't even know that they
didn't own the underlying part until they went to sell it :P Bet somebody go
their knuckles rapped for that.

------
zmmmmm
Hopefully this forces Google to drop the "play nice" attitude with carriers &
Skype and properly integrate video chat into Android across the board (yes,
it's in 2.3.4, but it annoys me that Google left it this long and even then
made it tied to a release that many phones will not get for ages if ever).

------
Duff
Huh? I understand that Microsoft is sitting on billions in cash, but couldn't
they just pay a dividend?

~~~
dstein
Paying a dividend will not save Microsoft. Even Microsoft realizes that.

~~~
philwelch
It will serve the long term interests of Microsoft shareholders; sadly,
Microsoft _doesn't_ realize that.

~~~
dstein
Dividends reward short term shareholders. Capital reinvestment rewards long
term shareholders (if it's successful).

~~~
Duff
10 years ago, Microsoft was $35. Today it is $25 and change. Not very
rewarding.

Microsoft is like the electric utility of the technology business -- they
should embrace that or wake up and break up the company into manageable parts.

Buying Skype? That's not creating shareholder value.

~~~
garethm
For what it's worth, there was a stock split in 2003 [1], so the same stock
would be $50 today.

1:
[http://www.microsoft.com/investor/InvestorServices/FAQ/defau...](http://www.microsoft.com/investor/InvestorServices/FAQ/default.aspx#section_4)

------
neworbit
MS would do a lot better to buy 200 promising startups (especially in the
mobile space)

~~~
firebones
I get the sentiment, but do you really think a) that there are 200 worthwhile
startups in the mobile space, or b) that there are 200 _promising_ startups
that you could acquire for an average of $350 million each that would have
anywhere near the chance of establishing a network effect as big as Skype's in
any kind of reasonable internet timeframe (say, in the next 5 years)?

~~~
neworbit
a) Probably, though I bet I don't know most of them. If I were MS M&A I would
bet disproportionately on mobile, though, because that's an area they need to
nail if they want to stay relevant. If they could get 70 out of 200, that'd be
a darn good start.

b) Individually, not terribly likely. Collectively? Sure. (And it's $35M each,
but the exact number isn't the point - let's say you could offer every
ycombinator and techstars startup an average of $35M each, you'd likely end up
getting two or three Dropbox-esque gamechangers, a few dozen decent products,
and 150 otherwise good ideas folded into MS and dead-ended.)

~~~
firebones
To the extent that my math was way wrong, I think your point carries more
weight (meaning: you're an order of magnitude better than I thought). I'd say
if they bought the top 10 mobile plays for $70 million each they'd have a much
better expectation (assuming that the acquisitions could be digested--risk
which itself carries a significant reduction in expected value).

~~~
neworbit
As far as network effect, I would pay a bundle for Twilio if I was in an M&A
position.

------
dman
I hope all the IP is included in this deal.

~~~
acqq
It seems so, this time:

<http://about.skype.com/2009/11/joltid_settlement.html>

"eBay Inc. and Silver Lake Investor Group Settle Skype Litigation with Joltid
Limited"

------
brisance
I fail to see how this is a wise business decision. Skype has been losing
money for a long time, and with cheap/free competition like Google video chat
and FaceTime etc, why would MSFT invest in this?

~~~
lotusleaf1987
I think you answered your own question: to compete with FaceTime and Google
Voice. I think they're afraid to sit this race out the way they did mobile and
get left behind again.

~~~
aneth
If Microsoft somehow owned both of those services, would it affect Microsoft's
prospects? Certainly not. FaceTime is a gimmick that few people actually use
use. Google Voice is bridge between soon-to-be legacy voicemail and cellphones
and the future, which is unlikely to be owned by either Google or Microsoft.
Neither business would help Microsoft grow again, and neither will Skype.

~~~
guywithabike

        FaceTime is a gimmick that few people actually use use. 
    

Do you have any data to support this assertion?

~~~
brettnak
My friend who lives far away has an iPhone. I have a mac, we use it all the
time. I actually hate using Skype because some clown has my username. We use
Skype at work, but I never get entrenched in a service if I don't get my
username. Just a singular of data for you.

------
horatiumocian
I think that Microsoft buying Skype makes more sense than Google or Facebook
buying Skype.

First, the way for Skype to make decent revenues is to go for the enterprise
market, which brings them paying customers. It would be really hard to convert
end users to paying customers, because of all the competition out there
(Google Voice). So, they need to cater to enterprise customers. And Microsoft
is huge on the enterprise, they would be able to integrate it into their
suites, and make it a multi-billion dollar product in a few years.

I don't see any reason for Facebook buying Skype (different technology,
different culture, price too high). Also I don't see any reason for Google to
buy it other than to kill it and fold it into Google Voice (possible anti-
trust issues?). So, even if the Microsoft-Skype deal isn't a match made in
heaven, it still makes much more sense than Facebook-Skype, or Google-Skype.

------
kayoone
They will use Skype like Apple uses Facetime. Get it natively into every
Windows PC, Windows Smartphone and Tablet and let people (video)call each
other easily. With the userbase MS has, this doesnt seem like a bad idea.

Imagine Scheduling Meetings in Outlook with automatic Video calls to everyone
involved. Could be huge in the b2b market

------
dstein
Interesting to note that the market cap of Vonage is only 1.04B. They might
have been able to buy up every single other VOIP company on the planet with
the remaining $6 Billion.

~~~
Steko
I'm sure integrating a truckload of companies all with wildly incompatible
systems and personnel would work out more horribly then we could possibly
imagine.

------
justincormack
Skype's (technical) HQ is in Talinn just across the water from Nokia,
Microsoft's other new "acquisition"... useful for their mobile strategy
perhaps?

But Skype's infrastructure is all Linux + Postgres (they are a huge Postgres
user), so maybe they will be forced to rewrite it all on SQL server for the
next few years.

~~~
bergie
If I remember correctly, Hotmail for still running on BSD many years after the
MS acquisition

------
portman
And here's the press release, confirming the $8.5B pricetag.

[http://www.microsoft.com/Presspass/press/2011/may11/05-10Cor...](http://www.microsoft.com/Presspass/press/2011/may11/05-10CorpNewsPR.mspx)

------
freechoice1
Recently when I started to outsource work I noticed everyone had Skype and
wanted to use Skype. Skype is the no1 general platform for reliable business
communications today. I got amazed myself how many actually use Skype in this
sector.

Skype is the new msn for voice chat and has been for quite a while. One of the
reasons Skype is so attractive for businesses is the encryption methods it
uses. I know the governments are annoyed by Skypes encryption due to they
cannot listen and spy on those talking there.

~~~
technomancy
> I know the governments are annoyed by Skypes encryption due to they cannot
> listen and spy on those talking there.

Which governments? I've heard that the US and China have the keys.

~~~
zipdog
Yeah, I vaguely recall Skype doing something in around 2008 that gave US govt
some level of access. (No citation)

------
drink
Strange realization: I am relieved that Microsoft bought this, and not
Facebook. Can't remember the last time I was relieved that Microsoft bought a
company.

~~~
mojuba
That's really strange. Not being a fan of either, I'd bet Facebook knows a bit
more about Internet than Microsoft.

Though in the end both are just money making machines with unethical
practices. In either case you can expect Skype to become less geek-friendly
and more like a surprise box with an evil clown inside.

~~~
lupatus
Given Microsoft's investment in Facebook in 2007
(<http://www.nytimes.com/2007/10/25/technology/25facebook.html>), can we
expect a Skype for Facebook or some other sort of integration?

------
1880
I guess the Linux client will stay beta forever... sigh

~~~
natesm
That's probably best, after what they did to the Mac one.

~~~
lurker19
Skype 2.8 for Mac exists and is from better user experience than any Windows
or Linux version.

~~~
codelion
Surely, you are not aware what is a better user experience.

~~~
dasil003
Yes I am and don't call me Surely?

(sorry, punctuation nazi + Airplane reference temptation overwhelming)

~~~
codelion
<http://ignorethecode.net/blog/2011/03/30/skype_5/>

~~~
dasil003
Why are you replying that to me? My comment revealed no value judgement one
way or the other about any version of Skype, it was just a joke.

~~~
codelion
Hmm, I got lost in the comment nesting. Never mind.

------
ChrisArchitect
if MS absorbs the Skype technology into their own IM/chat/communications
systems - and skype users are left out on a limb - _where do they go?_.

They stay with the MS product line happily perhaps, or they go to __________?

gChat/open/xmpp? Jump all the way to Apple FaceTime (seems a far jump). Or
with forthcoming p2p flash video ease-of-dev/ease-of-use, does this all just
become super common/easy to access?

------
Rariel
The only way I can think of for them to really, really make this worth it
beyond just owning the service is to integrate it in to Outlook like gmail
video/voice chat. Although worker bees would hate it, it would be cool as a
supervisor to be able to "call" your employee from a program you already have
open all day anyways. Or even co-workers working on a project too lazy to get
up or lawyers who need to talk about something but don't really have time to
stop what they're doing. They could implement a feature enabling you to "add"
friends who use outlook to your chat/buddy list. I don't think it would kill
off gmail, but it would make some people much less likely to try it.

On a more personal note, I _really_ hope they don't take away all those cool
chat thingys (refuse to call them emoticons). That dancing guy and
disappearing pizza get me every time.

~~~
kooshball
You can already do this in lync

[http://lync.microsoft.com/en-
us/Product/Workloads/Pages/conf...](http://lync.microsoft.com/en-
us/Product/Workloads/Pages/conferencing-software.aspx)

------
daimyoyo
I have a feeling that Microsoft was suckered on this one. Google and Facebook
probably had no interest in skype, but bid it up so Microsoft would have to
pay more. You'd think after all these years, and having this same thing happen
time after time that they'd know that trick and see it coming. Guess not.

~~~
lotusleaf1987
I think Skype would have been more valuable to Google, than to Microsoft--
imagine having a free Google Voice number linked to your Skype ID. I think
Microsoft was willing to pay a $1-2 Billion premium to keep it from Google and
maybe a bit more to be able to use it as a bargaining chip with Facebook in
their (MSFT and Facebook) pseudo-alliance.

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hessenwolf
"Goldman Sachs Group Inc. and J.P.Morgan Chase & Co. advised Skype on the
deal, according to people familiar with the matter. Microsoft is not using any
financial advisers for the deal, the people added."

I see. That makes the 8.5 billion (price + debt) make more sense.

~~~
smackfu
Funny, but financial advisors on acquisitions are just people who want a few
percent for doing nothing.

~~~
hessenwolf
Hmmm... I would definitely be happy to pay somebody a few bucks to perform a
reasonable independent valuation. I mean, seriously, whats 500K compared to
8.5 billion?

~~~
smackfu
The counterpoint is basically, did you see what happened with the global
financial crisis and valuations?

~~~
hessenwolf
True that those working in the rating agencies should be ____ked in the
eyesocket with rusty screwdrivers...

I see. Yes. An independent valuation would be nice, if you could trust someone
to have the competence and integrity to do it.

------
jpwagner
just remember that skype's product was already starting to suck before
microsoft bought them...

------
mmcconnell1618
What does Skype's patent portfolio look like? Could this be a way for
Microsoft to shutdown other video chat services or at least extract a hefty
license fee?

------
joshaidan
I guess this is good for the Canadian Pension Plan. :)

~~~
joshaidan
I think it was about a 363% ROI on their $300 million dollar investment.

------
hanszeir
I hope Microsoft Skype does not require a hotmail account. This is good
opportunity for Skype's competitors such as FaceTime to grow.

~~~
TeHCrAzY
For a long, long time now, MS services (not directly tied to Hotmail itself)
have required a Live account only, which can be created with any email
address.

------
rglover
I have no real qualms with a Microsoft buy-out, but I was really hoping for
Facebook to get on this one. However, this sort of leads me to believe FB is
working on something they may consider "better." Let's just hope the MS crew
does something intelligent with this move and we don't have another Delicious-
style implosion.

------
gregzav
Selling my Microsoft shares... Bought them a year ago thinking they could at
least make one step in the right direction.

------
jmjerlecki
Microsoft finally gets back in the game? I'm as big a fan of Google as anyone,
but it's nice to see Microsoft win one.

------
geoffreyvanwyk
Why does Microsoft feel the need to buy other companies? Why do they not just
build their own Skype version if they like it so much? How many people are
going to lose their jobs now? Why do they employ all the brilliant young
programmers if they are just going to buy up companies and not create new
products?

~~~
netcan
First, this is something that works now.

More importantly, this is a textbook network effect market. Skype users are
what makes Skype work. If MS announced they building their own, what odds
would you offer me to bet I use it to talk to my Mother on it within 2 years?

------
drallison
As I commented in one of the other postings for this event: "There goes the
neighborhood....".

Skype is/was one of the most significant products of the last decade or two.
one I use and depend upon every day. I doubt that Microsoft will be able to
avoid killing the goose that laid the golden egg.

------
erikpukinskis
That means ebay is up $1.4 billion on the fiasco:

-$2.6b purchase + 70% of $2.75b on sale + 30% of $7b on Microsoft sale = $1.4b

Not sure if they got any cash from profits, and they probably spent a bunch of
money on the purchases/sales and subsequent culture integration stuff.

------
rbot
Think J Allard's meeting at Skype in January has anything to do with this?

------
kmfrk
$7B is a lot of money, but might be more relevant is how much Facebook were
thinking about paying for the company. Maybe it was not just an acquisition,
but a strategic overbid.

------
pjy04
Skype is losing tons of money and needed to get out with whatever users it
had. Microsoft can then sync this up with their own communication clients for
a joint play.

~~~
barrkel
Losing? 2010 EBITDA was $264 million, according to my cursory search.

------
tsewlliw
I always thought Skype and LinkedIn would be a really great match. But maybe
this is an artifact of being introduced to both at the same time by the same
person.

------
braindead_in
Will be interesting to see what happens to the Skype API. It's used by a lot
of 3rd party plugins and is quite comprehensive. Hopefully they will not kill
it.

------
nl
I wonder who leaked this?

Was it someone from Skype (or their VCs) trying to start a bidding war?

Or someone from Microsoft trying to kill the deal (or get Google to overpay)?

------
MichaelApproved
I hope the IP is actually included this time.

------
keyle
Windows 8's FaceTime brewing!

------
stevenj
The headline on the article's page says "nearly $8 billion".

------
darwinGod
So,I will have to create a live id to use skype ? :-/

------
goombastic
skype on nokias would be nice.

~~~
matt4711
I can use skype on my nokia e63. It's even free to make and receive calls
to/from skype contact through some landline gateway provided by my carrier.

chat works too but the interface is not that great.

------
bobx11
I think a lot of people would try to use other services if this goes through.

~~~
eropple
Hilariously unlikely, unless your definition of "a lot" is small enough to
cover the more neckbeardy sorts in the Linux community and maybe a few ABMers.

Most people just don't care so long as the software works well. (Whether Skype
does work well is debatable, but given its popularity, it seems to work better
than the rest of the options available. EKIGA SOFTPHONE, EVERYONE!)

------
imrehg
That goes through: bye-bye Skype. It was ~okay to know you.

------
beedogs
Say goodbye to the Skype Linux client...

------
aneth
The most valuable asset of Skype is not the technology, but the social network
and user base. That however is not all that valuable since, unlike Facebook,
Skype is mostly a 1:1 communications model easily moved to another network.
When people want to communicate, they will use whatever is easiest. Skype has
minimal and diminishing revenue potential, adds nothing to MS core products,
and the social network is not all that sticky. It's a dumb buy by a dumb
company. I haven't heard a positive word said about Microsoft product
management by an employee in 3 years of time spent in Seattle.

------
repoleved
This marks the death of Skype on the Mac.

~~~
webXL
Hogwash. Oprah won't allow that.

