Microsoft Buys Skype: We Cannot Figure Out Why

May 10, 2011 1:25 pm

Microsoft has bought Skype for some 8.5 Billion dollars. They say, at the right price, every buy is good. But even keeping the price aside, we cannot figure out why Microsoft did this deal.

GigaOm has a post explaining why the deal could make sense. We’ll respond to those points.

1. Skype gives Microsoft a boost in the enterprise collaboration market, thanks to Skype’s voice, video and sharing capabilities, especially when competing with Cisco and Google.

[StatSpotting Response] Skype is essentially a consumer company. We do not think how Skype can help Microsoft in any possible way inside the enterprise, from a business perspective. From a technology perspective as well, Microsoft has all those products in some form already.

2. It gives Microsoft a working relationship with carriers, many of them looking to partner with Skype as they start to transition to LTE-based networks.

[StatSpotting Response] Many of them are “looking” to partner with Skype. The future landscape of LTE based networks is just getting constructed, and it is a leap to say Skype will be a big player then.

3. It would give them a must-have application/service that can help with the adoption of the future versions of Windows Mobile operating system.

[StatSpotting Response] Seriously, with Google Voice, Vonage apps and all thats happening, this is not the killer app to have that it once was. Skype waited too long and lost that game altogether.

4. However, the biggest reason for Microsoft to buy Skype is Windows Phone 7 (Mobile OS) and Nokia. The software giant needs a competitive offering to Google Voice and Apple’s emerging communication platform, Facetime.

[StatSpotting Response] This is a fair point. Skype is definitely part of MS-Nokia gameplan. But Microsoft need not own Skype to pull this off, a business deal on the same lines as the Nokia one would have been sufficient.

[Conclusion] Having said that, we need to add that Skype has been a stunningly appreciating asset throughout, and we might have to eat our words pretty soon. But for now, we just cannot figure out why Microsoft bought Skype.

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3 Comments for “Microsoft Buys Skype: We Cannot Figure Out Why”

  1. Surprising that no one is talking about the potential for next generation gaming consoles to utilize Skype. The next Xbox / kinect product will undoubtedly utilize Skype as a way to bring video conferencing in-home on a mass scale.

  2. Prasad, Ram

    I am surprised you have never mentioned about Microsoft Lync here…the product launched by Gates Nov last year…its s/w based telephony system….most/all the Skype users will be MS OS…what is the play here…

    http://www.channelregister.co.uk/2011/05/10/skype_microsoft_analysis/

  3. junior

    Chris, Ram – Thanks for the points.

    Chris – very good perspective. But that would mean this is a tech buy which is an argument we have difficulty buying.

    Ram – you are right, there is a lot of tech overlap, which adds to our point about not being able to figure out why this deal happened.

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