Microsoft Takes On Facetime With $8.5 Billion Purchase Of Skype


In a rather surprising and aggressive move, it was announced by Microsoft today that they are buying the communications company Skype for $8.5 billion in cash. Skype is a market leader in peer to peer VoIP and in 2010 had in excess of 170 million connected users.  The full text of the press release can be found here.

The deal will apparently enable Microsoft to support Skype on a variety of devices and services like X-Box, Kinect, Windows phones and other Microsoft applications like Outlook, Messenger and Hotmail.  With iOS and Mac versions of Skype, it is notable that the company will reportedly continue to offer support for non-Microsoft platforms i.e. Apple users.

The deal, thought by some to be an overpayment, clearly signals Microsoft’s intentions to compete with Apple’s Facetime technology which has become increasingly popular with the release of Facetime compatible devices such as the iPhone 4, the iPad 2, the iPod Touch and the Mac edition of Facetime.  Additionally, the new MacBook Pro and iMac are shipping with Facetime HD cameras enabling high quality video conferencing.

Given that the Mac version of Skype hasn’t always been the most modern or well implemented communications application on OS X, it’s unlikely that Apple are going to break a sweat over this just yet.  However, it will be interesting to see if the Microsoft purchase results in increased investment and development of the Mac version, prompting Apple to up their own game with Facetime.

How Big Is Too Big…

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  • Supermn45

    I personally hope this works out good for Microsoft, simply for the fact the competition will help keep Apple driven to put out even better products. Remember how it was when Microsoft ruled the world with there product without the competition their quality dropped and the consumer had to just deal with it. Then finally Apple came back on the scene with a vengence leaving Microsoft scrambling to catch up. The competition is always good for the consumer.

  • Daren

    I can’t help but think that Jobs, Sergey and Zuckerberg are all emailing bad jokes back and forth right now. It’s not just $8.5 billion for a money-losing business recently assessed at $4B, but it just seems like Redmond is thrashing around. Their big recent moves have been Nokia and Skype, both long in the tooth companies that haven’t been innovative in nearly a decade.
    They should really be ashamed of the Nokia deal–“here’s several billion dollars–please, pretty please use our mobile platform.” If the only way you can get someone to take your products is by paying them to do so…
    For some perspective, imagine what kind of bidding war would ensue if Apple offered to license iOS to handset makers.
    Meanwhile, all the alternatives to Skype–Google Voice, Facetime, Facebook chat, etc.–are held in check by Skype because it is simple, free, and platform neutral. If Microsoft messes with any of those aspects, then the competition will get fierce, with Facebook really kicking their ass. But leaving Skype as is just leads to more negative revenue and little upside for Redmond.
    Their last option is to use the platform to launch a bunch of great innovative communication products, leveraging skype’s big user base to become a leader and innovator in communications again. That would be great for them. Maybe they can subcontract Apple’s braintrust to come up with the products.

    • http://www.applebitch.com AppleBitch

      Perhaps the new ‘Microsoft Stores’ can turn everything around for MS :)