

Facebook considering $3-4Bn buyout of Skype - pitdesi
http://mashable.com/2011/05/04/facebook-buy-skype/

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inoop
The Skype app on Android is really only barely functional, and what is more,
the total lack of support or interest in fixing bugs from their side is almost
comical. A couple of months ago I fixed a problem where the sound was coming
out of the back speaker rather than the earpiece, a problem that seems to
affect many people.

I located the problem and fixed it using baksmali/smali. I then opened a
ticket on their public Jira server describing the problem, solution, and even
attached the patched .apk. Months later they _still_ haven't merged it into
Skype proper, even though it's literally a two-line fix. In the meantime loads
of people cannot use Skype on their phones.

The fact that a company that is supposed to be worth 1 trillion USD doesn't
have the manpower or interest to fix such a simple bug that totally breaks
their product for a lot of people should tell us something. From the outside
it looks like all the skilled people have left a long time ago, and I wonder
if they'll be able to maintain their market position like this.

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benjoffe
> The fact that a company that is supposed to be worth 1 _trillion_ USD...

"Billion"

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inoop
Yeah, non-native speaker here, the system works a bit different in my
language, hence the confusion. I spotted the mistake but couldn't edit my
post.

Luckily you can always count on the internet to point out your typos.

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horatiumocian
I don't see many reasons for Facebook to buy Skype:

1) Technology: Skype's core technology is their P2P technology. They have
their own clients for PCs and mobiles. Facebook resides in the cloud, and it
works from the browser. This is a huge difference on PCs/Macs, but less so on
mobiles, where Facebook also has apps.

2) Price: At $3-4Bn Skype would be by far Facebook's biggest acquisition, as
all the others have been under $100M. As they don't have the amount of cash
that public companies like AAPL, GOOG or MSFT have (at least not yet), it's
quite a big effort for them. There need be a lot of synergies to justify
paying this kind of money.

3) Culture: Skype is older than Facebook, and has European roots. Facebook has
so far made small acquisitions (more like acqhiring), they don't have any
experience with integrating a big company like Skype.

4) Business model: Skype is going for the enterprise market (see the
appointment of the new CEO last autumn), and selling subscriptions. Facebook
is going for consumers, and selling ads.

Overall, I think a better option for Skype would be an IPO, a telco
acquisition, or maybe a Google acquisition.

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staunch
Andreessen was an investor in Qik.

Andreessen did a huge deal to buy Skype.

Andreessen is an investor in Facebook AND on the board.

He sold Qik to Skype for $100M and now he's going to sell Skype to Facebook
for billions?

"No conflict, no interest" indeed.

~~~
horatiumocian
I am not sure that Marc Andreessen has so much influence at Facebook. He has
one of the 3 board seats that are controlled by Zuckerberg. And Skype would be
Facebook's biggest acquisition so far, so it wouldn't be easy for him to
convince Zuckerberg to do it.

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decadentcactus
I _really_ hope that there's no forced integration, logging in with Facebook
or anything.

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smallhands
are you kidding, that will be the first thing they will do

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jfruh
Ha ha, remember when Skype pulled this scam with eBay? Good times!

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phlux
Yeah - but this is actually the most brilliant move that Facebook can make -
and makes such greater sense than eBay.

You have a service of 500 MILLION accounts that _actually_ talk to eachother.

The play here is so fucking obvious: the facebook Social technology portal
page: It is a smartphone on fucking steroids.

You get voice, an extensive contacts list, all the apps on the platform,
updates of actions etc...

There is no way why this is a stupid play on facebooks part.

If this goes through - they will have a phenomenally significant advantage to
google. Millions of users that now have every tool they need to communicate.
The additional services that facebook shall deploy only further lock in that
user base: payments, planning, groups, organizations... eventually it will be
about fostering and incubating companies and startups via facebook frameworked
group app support.

The next step is the facebook phone... all it has is a data connection - skype
all your contacts in-system, and the ancillary apps that they can end up
providing through the platform in 5 years will take on apple.

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buddydvd
Perhaps what Facebook want is all of Skype's customers' credit card numbers.
Linking them with Facebook accounts may help boost all of their future
30-percent-comission endeavors.

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calebmpeterson
In the event of this actually happening, what are some alternatives to Skype's
video chat?

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jerf
Person-to-person video chat is a commodity. If there's a problem it is that
there are too _many_ solutions.

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nametoremember
Yep. It seems Skype just won on brand name.

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pornel
They won on NAT traversal, ease of installation and lack of obnoxious ads.

I've learned about Skype _from my aunt_ who managed to install it and get it
working without phoning me.

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jacques_chester
Upcoming mashable/techcrunch/other-tech-gossip-site headlines to be linked at
HN:

    
    
        * Why Facebook will buy Skype
        * This is not a bubble
        * Facebook buying Skype is the dumbest thing ever
        * Skype's two hundred competitors that Google will buy
        * That settles it, we're in a bubble
        * Why Google/Microsoft/Yahoo/Apple should buy Skype
        * How I flipped my VOIP company for $4 billion in funny-money

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diegob
You're doing their work for them!

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jacques_chester
They've merely rightsized their organisation to wikify their newsroom with
crowd-sourced insight. It's totally thinking outside the paradigm, a true hack
on pivoting.

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MatthewB
At first I wasn't sure how Skype played into FB's strategy but I guess it
makes sense. Skype would come with a plethora of talent, which facebook is
known to spend money for. Also, the Skype technology would allow FB to fill
out the video communication side of things that they have yet to tap.

~~~
jackvalentine
Do you have any names in mind for this "talent" that Skype currently posess?
I'm not familiar with the company's staff at all but from how the OSX client
5.0 release was such a failure & how bad the android client is I'm inclined to
think there isn't much left at all.

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sahaj
Does Facebook have $3-4B in cash? I didn't think they had that much money. And
even if they do, they wouldn't have much left after the deal to move other big
plans forward. I guess if they go public first, then it could happen.

~~~
horatiumocian
Facebook may make $2B in profits this year. So I think they could come up with
this cash. Also, they can give some of this amount in stock.

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nametoremember
In profit? Source? (Not saying you're wrong - I just didn't know and would
like to read about it)

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horatiumocian
Here it is: [http://www.bloomberg.com/news/2011-05-03/facebook-is-said-
to...](http://www.bloomberg.com/news/2011-05-03/facebook-is-said-to-
expect-2-billion-in-2011-adjusted-earnings.html)

To be more precise, it's $2B in EBITDA, not net profit.

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ryanhunt
it's not overly surprising considering the recent Facebook<-> Skype
integration and Skype's expansion to the USA (new office in Brisbane, CA).

I'd say it's more like likely a 'strategic partnership' than a buy-out. Having
said that though, they're both private companies, so it may not as straight
forward as a normal 'merger'

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omfut
Its makes more sense for Facebook to buy Skype instead of Google. Here are
some of my points.( snippets from my article).

•Enhance their messaging platform with support for Voice and Video powered by
Skype. Off course Facebook can develop its own Voice and Video infrastructure.
Too me it’s a stretch. Instead by buying Skype they get instant access to
VoIP/SMS/Video features •Support Voice/Video will boost the messaging
platform, which doesn’t seem to have gained much traction •With Skype
Acquisition they also get QIK Live streaming capabilities. That’s an added
plus •Instant Access to more than 500 million users. The chances of Skype
users having Facebook account are high. There might be an overlap •Facebook
can really become a global operator providing Voice/SMS/Video/IM communication
to all its users. Off course PSTN access will still be short coming, a
partnership with one of the operator can offset this shortcoming •A Facebook
phone becomes a reality. Most of the operators are moving towards 4G/LTE, it’s
a matter of time that all Voice calls will be carried via IP network. With a
partnership with one of the access network, Facebook’s ambitious phone becomes
a reality. So constant monthly revenue for basic phone service becomes a
reality. Voila! •Patronize Innovation by opening up the Skype platform for
developers (Telco 2.0 Platform). Something similar to Twilio, Voxeo etc •Who
said Facebook is only for Consumer market, with Skype acquisition they can
venture into Enterprise market and become a threat to some of the incumbent
Video/VoIP provider like Avaya, Cisco etc •According to CDC Straw Poll 75% of
the companies will adopt, Video Conferencing by 2012. Skype already supports
consumer video conferencing which can be extended /enhanced for enterprise
•Voice conferencing is another big Enterprise feature. So armed with these
powerful features, facebook can look beyond consumer market •It makes sense to
have different revenue stream instead of relying only on advertisements
•Everybody wants a piece of Facebooks social graph including operators.
T-Mobiles recently launched Bobsled , a one touch calling within facebook. In
fact Facebook can do a better job than Third Party service providers.

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murz
I'm curious what the sources would have to gain by leaking this information?
In the Reuters article it says they had "direct knowledge of the discussions",
why would they risk their jobs to leak something like this? I don't get it.

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beedogs
beedogs considering no longer using Skype.

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calebmpeterson
if FB buys skype I'm out

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zackattack
fear of centralized access to personal information? is there a _secure_ easy
voip solution ?

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calebmpeterson
not so much fear...more of a well placed reluctance to trust a company which
has no regard for privacy

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kin
the first thing i thought of was video chat integration into facebook chat
exactly the same way google video chat is integrated into gchat. from there,
they could monetize on paid group chats, calls to numbers since fb's new
messaging is tied to mobile, etc.

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jseifer
Perhaps they will improve the new Skype client.

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gcb
skype is only a good option if they want users. because the only appeal of
skype is the userbase. really.

if facebook has the penetration everyone believes they have, skype would be
irrelevant. buy any other media streaming company with an actual decent codec
and the rest is commodity.

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netcan
Assuming you are right about the tech (I have no idea), it's not necessarily a
simple 'user acquisition.' I have a facebook account that I rarely use and a
skype account that's always on.

If logged in to skype meant logged in to facebook I would become a very active
facebook user.

I can't gauge the value of that to facebook because it's still not entirely
clear how they make money (at least not the kind of money investors are aiming
for), but it's possible skype is very valuable. Who I call, how long, what
hours, these all tell facebook a lot about me. Possibly more than my facebook
account does.

Different people use facebook for different things. Photo sharing, address
book, networking, chat, email (sort of), social news, games. Skype can add
another big bullet point to that list.

Again, it's hard to say good or bad for facebook's bottom line at this point.
If you are going by their current revenue model, you would have to relate
everything to demographically segmented pageviews but these kind of numbers
assume bigger value than that.

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gcb
that was mostly my point too.

I was mostly questioning how much users (or actual real users that actually
uses the site) there are in reality. not in the make believe news lives in.

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varjag
What? Skype is worth so little?

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moondowner
I don't fancy Facebook buying Skype.

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grinich
Why?

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exit
i don't have any positive sentiment towards facebook. i use skype a lot and
would resent suddenly being forced to use facebook.

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smallhands
I know this is off the topic.any body knows a skype like program that runs on
lan only thanks

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hexley
iChat/w Bonjour

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d0ne
"It's the end of the world as we know it." However, I don't feel fine.

<http://www.youtube.com/watch?v=Z0GFRcFm-aY>

