

Microsoft to acquire Skype - ukdm
http://www.microsoft.com/Presspass/press/2011/may11/05-10CorpNewsPR.mspx

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portman
Can anyone shed light on this statistic from the press release:

 _"With 170 million connected users..."_

Every article on Skype for the last 3 months has mentioned "600 million
accounts". (<http://www.google.com/search?q=skype+600+million+accounts>) But I
can't find an original source for that number; it seems everyone is quoting
"industry estimates".

Were the estimates on Skype's userbase wildly wrong, or is a "connected
account" somehow different?

~~~
nikcub
If you look at the SEC IPO filing[1], the most recent numbers (Dec 2010) are
as follows:

* 663M registered accounts

* 145M connected users

* 8M paying users

The 170M number is the most recent update of the 145M connected users number.
They define 'connected users' as active within a financial quarter

I have spent the past few hours reading through the SEC filing. Skype is still
growing very strongly[3], especially in the key metrics of active (connected)
users and paying users (both up 30%)

I think this is a great deal and will work out as well for Microsoft as PayPal
did for eBay. See my comment in the other thread about that[2]

As I mentioned in that thread, Skype is not profitable only because they wrote
down assets and acquisition costs to the tune of over $350M. Within Microsoft
it will profit near $500M this year (my back-of-the-napkin sums by projecting
out the old revenue figures with the new growth figures). A PE of 17-19 is not
a bad buy, considering the strength of the brand and the large user base.

Skype is probably the largest non-browser web/net application, and likely the
second largest social graph after Facebook.

What will be interesting now is the question of if Microsoft will work with
Facebook on Skype, or use it as a platform to compete with Facebook.

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

[2] <http://news.ycombinator.com/item?id=2531885>

[3] From their filing: _"We have significantly increased both our free and
paying users, growing our average monthly connected users by 38% and average
monthly paying users by 19%, from the three months ended December 31, 2009 to
the three months ended December 31, 2010."_

~~~
hessenwolf
Really only 8 million paying users? That sounds very low... given it is the
only online company other than adwords with my credit card details.

~~~
nikcub
8.8M that made a transaction in that quarter, which if you project forward
with the current numbers would equate to 5.8% of active users making a payment

not bad in terms of a freemium conversion rate and I think some of it can be
explained with:

* credits now have a longer expiry date, so you can bulk purchase and hoard credit

* US and Canada calling became free

* negative network effect of more people using skype = less people that you require the dialout feature to reach

~~~
Dylan16807
US and Canada calling became free? As far as I know that only happened for
part of 2006. In addition to calling 1-800 numbers being free.

------
Sigma11
Am I the only one finding this simply amazing how Niklas and Janus managed to
sell same technology/business twice?

Granted, there was an incredible mistake on eBay part not doing proper due-
diligence, but pulling off what they did takes a lot of chutzpah for sure.

This most probably going as a case-study into modern economy text-books.

------
toddmorey
Why is it that I like Skype less on the other side of this announcement? It's
not that I'm anti-MSFT; I just like communications software like Skype to be
vendor neutral, competing on innovation and working to keep as many platforms
+ devices as possible at parity. I don't want someone to use Skype as leverage
to try to get me to switch platforms. I'm more likely to drop Skype and be
left looking for an alternative.

~~~
codeup
There may be alternatives that cover Skype functionality at least partly if
you have the skills and nerves to use them (based on SIP or jingle). But for
most of the 170 million connected users, including those who use Linux, there
is no alternative to Skype if they want the same featureset (im, voip, video,
encryption, conference calls,...). Sad but true.

~~~
roadnottaken
GChat is pretty idiot-proof, and platform-independent.

~~~
follower
Does it still not have cross platform video support?

~~~
jarin
How many people REALLY use video chat though? I mean more than once a year.
Even among techies and businesspeople, video chat rarely seems to have an
advantage over regular voice chat.

~~~
jokermatt999
Ever been in a long distance relationship, missing your kids when you're away
from home, or just want to see someone's face? Video chat isn't as convenient
as voice chat, but when you want to take some time out to really talk to
someone, it's the closest thing to face to face.

Also, I think video chat works better and will pretty much always work better
on computer than on smartphones. There's a much better screen, you don't have
to hold it just right, and it's easier to sit down and make time for a video
chat on a computer. If you're looking at the numerous failed attempts at video
chat on phones, I can see how you'd see it as useless, but Skype is different.

~~~
roadnottaken
FWIW, FaceTime on an iPad is very, very good.

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peregrine
My girlfriend has been traveling abroad and we haven't used Skype once. We
just used the built in capabilities of Google Talk. Its a simple plugin for
the browser, doesn't sit on my machine bugging for updates and slowing down my
startup time.

No dropped calls, good video quality, and simple integration.

~~~
dataminer
I have been using google talk but recently switched to skype because my wife
got an iphone and google talk does not work on it. Skype on iphone is really
painless to use and call quality is also very good.

~~~
peregrine
Thats one of my biggest gripes, there is not Google Talk voice on the phone. I
don't think Carriers would like it very much if Google had a free voice
platform.

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takameyer
I see this as a good thing. Currently Skype is used in my workplace, and
poorly at that. Mostly because the contact information isn't in sync with
Outlook accounts. This could probably be alleviated with some sort of process,
but no one has taken the reigns on that. So if this syncs up nicely with the
Microsoft programs I'm forced to use everyday, it'll just make things that
much easier.

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090178
The official announcement. I wonder how interoperability between various VOIP
solutions will turn out with MS on board.

I am one of these dreamer of a multiprotocol VOIP solution. Like emails
actually.

~~~
hvs
Or telephones.

~~~
martinkallstrom
In my eyes this is Facebook's missed opportunity. Facebook is a sufficiently
powerful brand to be able to negotiate exclusive deals with operators around
the world to launch a VOIP phone relying on flat rate data only, replacing the
address book with a subset of your social graph and SMS with Facebook
Messaging. Such a move could have been very disruptive towards voice phone
operators if paired with 170M desktop clients and the Skype protocol.

It's a strategy Facebook could adopt without Skype, but with the two brands in
unison they could rule the market. I don't see Microsoft being able to do the
same.

~~~
togasystems
I completely agree with you. Facebook could of became one of the largest
telecommunication companies in the world overnight. Maybe they will get the
chance to buy it off of MSFT much like how eBay sold it off. Probably not.

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p4bl0
> Microsoft will continue to invest in and support Skype clients on non-
> Microsoft platforms.

I don't personnaly use Skype for various reasons, but for the people who do,
let's hope that's true.

~~~
code_duck
That's certainly my concern. I have somewhere approximating zero faith that
they will continue the Linux client, considering Skype themselves have
essentially abandoned it, and the prospects for the other two I use, Android
and Mac, seem rather dim. We do have 30 years of MS history to go by here,
after all.

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roadnottaken
Hopefully Microsoft is swooping in to save Skype from the death-spiral it's
been heading towards for the last few years. There really is a lot of room for
improvement (software-wise) and I'm going to give MSFT the benefit of the
doubt for the moment.

~~~
rbanffy
I don't see a new Linux version coming...

~~~
xtfunlp
I was thinking the exact same thing when i read the headlines. But not that
the linux client is (was) as good as the mac or windows versions...

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mklappstuhl
I'm curious to see what Microsoft will do with the more or less unmaintained
Linux version of Skype.

~~~
20after4
Probably nothing. It will continue to be more or less unmaintained.

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dforeman
I just don't think Skype is a 8.5 billion dollar feature, especially any MS
implementation. It's not like Skype was a closed platform- they have an API
and their policy is to let the market decide which UX will win. I'm sure MS
could have built all the features they want without buying the company. Apple
already used the video conference marketing gimmick anyway and it's not
exciting anymore. Who uses Facetime? Video conferencing solutions are good
enough.

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paraone
Windows version written in delphi.

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mahrain
This should put some pressure on Google to allow international customers into
Google Voice. They have an opportunity now to take on all customers this deal
might alienate, but since I don't live in the US I can't use Google Voice.

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heri0n
Perhaps this will be a good opportunity for open-source alternatives to
finally take off if Microsoft kills off the Linux/OS X/iOS/Android versions...

~~~
wtracy
Can't happen, at least in the US, for patent reasons.

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LarryA
I predict that in two years they will have successfully marginalized their
investment into 'Microsoft Skype' - part of the OS/Office/Outlook suite.

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smcguinness
My hope for this deal is that Microsoft partners with CLEAR (or any nationwide
data provider) to create a VOIP Windows Phone.

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zmonkeyz
I was really hoping Sony would be smart enough to adopt Skype one day as their
game chat system but oh well.

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jmjerlecki
So do the co founders list themselves as 2X entrepreneurs? lol "Oversaw the
successful acquisition of Skype to eBay and Micorsoft." Talk about double
dipping.

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lotusleaf1987
Skype+Kinect+XBox actually sounds pretty cool, even WP7 _seems_ to have some
potential. I actually think MSFT made a good move and it was worth it to keep
Skype out of the hands of Google/Facebook.

If I were Microsoft I would even look at buying out
Pandora/Spotify/Slacker/Last.fm, Netflix, and remove the file limit on their
Windows Live online storage to compete more directly with Dropbox and others--
then there'd actually be incentive to use a Hotmail/Live account again and
with a plethora of subscription services they could set up their own app store
that would compete a bit better with iTunes and sync with Xbox Live. Something
else powerful is it would be one bill for your Xbox live, online storage,
email, movie rentals, games rentals (potentially), apps, music subscription,
and VoIP calls.

~~~
encoderer
I've been thinking the same thing.

Look at the modern smartphones. The lesson I take from iPhone and Android is
that if you build a device that has a fair amount of memory, a modern
processor, and an array of interesting sensors and input devices, developers
will build for you amazing applications, killer apps even, in ways you're not
able to imagine.

I imagine a next-gen xbox. It has kinect built in. Great APIs for that. It has
Skype and Xbox Live and the various Windows Live services all built-in, with
great API's for those, treating them as services.

You push the appstore model via xbox live on that device and I bet $10 that
developers produce some amazing things for that platform. Perhaps even game
changers. It revolutionizes computing in your living room the way that the
iPhone revolutionzed computing in your pocket.

I also think... you'd have a very powerful remote control and connection
ability to that device using every new Nokia phone (and any new phone on WP7).

Final thought along those lines is that WP7 is really a great mobile OS. I
bought a new phone just last week. I'm on Sprint, so the HTC Arrive was
available to me which is a new WP7 phone. I had to decide against it and went
for an Android device but that was begrudgingly because there's no 4G WP7
phones in Sprint's line-up. (Ended up going Evo).

Here's the thing... WP7 just FEELS good to use. Way moreso than Android and
also moreso than iOS. It's very snappy. It uses screen space well. And the
Arrive has a GREAT physical keyboard, the best I've ever used on a phone.

No 4G killed it. Also, no removable SD card. And finally there was the Apps
issue but they've put out some great dev tools for WP7. I think it's only a
matter of time before they catch up.

Also I'm skeptical that the voice UI works as good as it does on Android.

Sorry for taking this slightly off topic but to bring it back around it's
this: Microsoft could really do some great value-adds with Skype on a number
of their platforms.

~~~
zmonkeyz
I'm loving my WP7. Oh well maybe next time :)

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xnerdr
On a side note, why has no serious competitor to Skype appeared? Given the
maturity of the tech involved (its just VOIP) and the size of the pie, i'd
have thought there would be more competition for a slice.

~~~
qeorge
I believe the underlying tech, Global Index, is patented and valuable. Global
Index is the p2p matchmaking software that runs under Skype (and Kazaa back in
the day), which means Skype doesn't have to run centralized servers to route
call data. Its also what lets them punch holes in firewalls.

My understanding is that their competitors don't (can't?) do this. For
example, SIP runs through a central server (e.g., Google's). This allows Skype
to run their service more cheaply, and its cheaper to provide service for each
marginal user. Its a pretty strong network effect.

So, in addition to their brand and userbase, they do have some tech MS might
want and can't get elsewhere.

~~~
tene
You seem to be confused about SIP. SIP is the "Session Initiation Protocol",
and its entire point is to coordinate initiation of a direct session between
endpoints, the so-called "SIP Trapezoid".

SIP is a lot like SMTP. When you make a SIP call, you talk to your local SIP
server, which talks to N intermediaries (usually 0) before going out to the
public internet. After passing off to the destination server, the connection
can go through N intermediaries on the remote side before being delivered to a
final user agent. This connection isn't for delivering audio and video,
though, it's for _coordinating_ a direct RTP connection to use for audio and
video. Once the two endpoints are communicating, they send information about
their real network location, work out details about NAT, and set up a direct
RTP connection, possibly using STUN to deal with NAT issues. In a normal SIP
environment, neither party's SIP server ever sees any of the actual media.

This is all fairly similar to what skype does, except skype has additional
infrastructure for routing media through other clients, in cases where two
endpoints can't find a way to communicate directly, as I understand it. I'm
not actually authoritatively-informed about skype, though, so don't rely on
this last bit.

~~~
qeorge
Thanks tene, that's really good info. I was 100% turned around on that -
definitely thought SIP had to route the call data through a central server.

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ignifero
What's next, MS? LinkedIn?

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trekmambo
Oh lord, does this mean fb is going to own skype data? Just no escaping the
claws of Zuckerberg.

~~~
mauriciob
What does Facebook have to do with Microsoft?

~~~
evolution
I'm not sure if he meant this but Microsoft is investor in Facebook so
apparently Facebook getting access to the Skype technology.

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klinquist
apt-get remove skype

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launcap
Maybe MS can clean up Skypes habit of puching big holes in your network
security - it's one reason why it's banned here..

~~~
rimantas
It's one of the reasons why it is popular: because it just works for ordinary
users, without the need to do something about network configuration.

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tttp
Can anyone shed light on this: "share the vision of bringing software
innovation and products to our customers"

Are they the only one sharing that vision? Are they software companies with a
vision of dumping obsolete software and products to their customers ?

Big fan of stuffing fluffy meaningless statements into each PR. This one is a
keeper.

~~~
LarryA
"read share the vision of bringing software innovation and products to our
customers" as

Grab a piece of (someone else's) software innovation and products and sell
those to our customers.

