Will Microsoft Ruin Skype?

By SpiderGroup

10 May 2011


In the last day Microsoft have shelled out a reported £5B to purchase Skype from an investment company and ebay (who still owned around 35%). There has been a lot of buzz on the internet about this purchase: Why have they done it? Have they paid too much? Are they going to ruin Skype?

At the moment no one knows the answers to these questions but I personally think this is quite a good purchase, as long as they can integrate this into the rest of the product range.

So let’s look at why they’ve done it:

Now they have access to 700 million users; obtained a great technology; and are now the market leader in VoIP.

In one foul swoop they have jumped ahead of Apple and Google in consumer internet telephony and video conferencing, plus kept it out of the hands of Facebook. The interesting thing is that Skype is the only truly platform agnostic offering, in that it runs all major desktop systems as well as nearly all mobile phones, which is something Apple and Google can’t claim yet.

Have they paid too much?

It is hard to say if they have paid too much or not, my feeling is yes but if it helps them gain ground in the consumer market, which is something they are striving for (this is why Apple has done so well), then it could be money well spent. The issue Microsoft had was that they were bidding against other companies with pretty deep pockets and they probably needed/wanted Skype more than the others.

Will Microsoft ruin Skype??

I don’t think they will ruin Skype, they’ve paid too much to allow it to wither and die. I think they will wait for a while, take stock of their acquisition and look for ways to integrate it into their other products. XBOX live is ripe for integration as is the Microsoft Office platform, there is also the possibility of aligning it with – or replacing – Live Messenger. (That said I wouldn’t want to be responsible for integrating those platforms together.)

Overall I think this is a good move for Microsoft and quite a brave one, time will tell to see if it is a wise one.

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