It’s confirmed: Microsoft to acquire Skype for $8.5 billion

By LiveSide | In Featured, News | Posted May 10, 2011 26 comments

Skype on Windows Phone 7Our previous reports earlier today indicating that Microsoft to acquire Skype has been confirmed, with Microsoft releasing a press release this morning announcing that the internet communications company will be bought for $8.5 billion, the largest acquisition in Microsoft’s history. According to the press release, the acquisition will "increase the accessibility of real-time video and voice communications" and "bring benefits to both consumers and enterprise users", hinting that there are plans to bring Skype to both the consumer and business sides of Microsoft’s existing communication tools. Specifically, Microsoft states that:

Microsoft has a long-standing focus and investment in real-time communications across its various platforms, including Lync (which saw 30 precent revenue growth in Q3), Outlook, Messenger, Hotmail and Xbox LIVE.

Skype will support Microsoft devices like Xbox and Kinect, Windows Phone and a wide array of Windows devices, and Microsoft will connect Skype users with Lync, Outlook, Xbox Live and other communities. Microsoft will continue to invest in and support Skype clients on non-Microsoft platforms.

It’s quite surprising that Windows Live Messenger is not specifically mentioned in the list of services that Microsoft plan to integrate into. It seems like the focus first is to connect Skype with Microsoft Lync on the business side. On the consumer side, Microsoft already announced that the Skype app will be coming to Windows Phone 7.5 soon, and this announcement makes a big news for Xbox 360 owners who will see Microsoft bringing Skype to their Xbox and Kinect devices. However, we expect that it might be a while before we see Microsoft integrating their Skype and Windows Live Messenger services together. I hope they prove us wrong.

Take a read of our previous post Microsoft to announce Skype deal: “What does it mean?” for an insightful analysis from Kip of what this acquisition means for Microsoft.

Posted May 10th, 2011 at 5:46 am
  • Kevin Campbell

    8 billion, that is a load of money, how much are microsoft worth? 50 billion?

    • Anonymous

      Microsoft made almost $19 billion proft last year, from $62 billion revenue. $8 billion is not that much for them.

      • Kevin Campbell

        oh right, thanks for the information, hopefully skype will turn into a better company under microsoft

        a question to anyone reading, do you think mac support will stop for skype now microsoft will be in charge?

        • Chris

          Given they make office for mac and really great iOS apps (bing for ipad) I could see microsoft doing some amazing things.

        • Anonymous

          One of the great things that made Skype so popular in the first place as been its cross-platform availability, not only between general computer OS, be it Windows, Linux, MacOS, etc but it also works on a wide range of mobile platforms anything from Java powered dumb phones, to the latest smart phones.

          This opens skype up to pretty much everyone who wants to connect and talk with friends, family and business contacts via a cheap (from FREE in lot of cases, even on cell phones) VoIP service.

          I’d would be in Microsoft’s best interest to keep the userbase it already has well supported in the software and cheap service they already have access to.

          With the recent Nokia + Skype deal, I think Microsoft have hit jackpot with a very large user/fan base that they could not have accomplished on their own.
          Again, supporting the users who its own direct (cell/xbox/lync) want to talk to would be in its best interest.

          • Chris

            You may be very right. Only time will tell. Hopefully Balmer has the brains to keep it.

  • Kevin Campbell

    8 billion, that is a load of money, how much are microsoft worth? 50 billion?

    • calumcookable

      Microsoft made almost $19 billion proft last year, from $62 billion revenue. $8 billion is not that much for them.

      • Kevin Campbell

        oh right, thanks for the information, hopefully skype will turn into a better company under microsoft

        a question to anyone reading, do you think mac support will stop for skype now microsoft will be in charge?

        • Chris

          Given they make office for mac and really great iOS apps (bing for ipad) I could see microsoft doing some amazing things.

        • Simon Johnny

          One of the great things that made Skype so popular in the first place as been its cross-platform availability, not only between general computer OS, be it Windows, Linux, MacOS, etc but it also works on a wide range of mobile platforms anything from Java powered dumb phones, to the latest smart phones.

          This opens skype up to pretty much everyone who wants to connect and talk with friends, family and business contacts via a cheap (from FREE in lot of cases, even on cell phones) VoIP service.

          I’d would be in Microsoft’s best interest to keep the userbase it already has well supported in the software and cheap service they already have access to.

          With the recent Nokia + Skype deal, I think Microsoft have hit jackpot with a very large user/fan base that they could not have accomplished on their own.
          Again, supporting the users who its own direct (cell/xbox/lync) want to talk to would be in its best interest.

          • Chris

            You may be very right. Only time will tell. Hopefully Balmer has the brains to keep it.

  • JohnCz

    The Windows Live / Messenger team will have some tough decisions to make. Messenger has more active users but I suspect its branding is in need of a refresh. After they finish with Wave 5, my guess is they will probably be moved into the Skype division.

    Lync Online is definitely a logical objective in the short term and that should boost Skype revenue. As it is today, voice is only available in the enterprise version of Office 365 which I believe requires on-premise Lync Server(s). On-premise PBX capability is probably very desirable for mid-large sized businesses. But I would love to see them offer small businesses similiar/basic integrated capabilities without requiring a local server. Skype can probably enable that for Microsoft, globally. In a way, Google Voice has forced Microsoft’s hand in making a move like this. Eventually I see them bringing some this to Hotmail after they finish with Windows Live Wave 5 / Windows 8 releases.
    The more I think about this deal the more I can see how it will enhance Microsoft’s competitive stance.

    • Chris

      So wave 6 could see the end of Windows Live messenger and we would just use skype?

  • JohnCz

    The Windows Live / Messenger team will have some tough decisions to make. Messenger has more active users but I suspect its branding is in need of a refresh. After they finish with Wave 5, my guess is they will probably be moved into the Skype division.

    Lync Online is definitely a logical objective in the short term and that should boost Skype revenue. As it is today, voice is only available in the enterprise version of Office 365 which I believe requires on-premise Lync Server(s). On-premise PBX capability is probably very desirable for mid-large sized businesses. But I would love to see them offer small businesses similiar/basic integrated capabilities without requiring a local server. Skype can probably enable that for Microsoft, globally. In a way, Google Voice has forced Microsoft’s hand in making a move like this. Eventually I see them bringing some this to Hotmail after they finish with Windows Live Wave 5 / Windows 8 releases.
    The more I think about this deal the more I can see how it will enhance Microsoft’s competitive stance.

    • Chris

      So wave 6 could see the end of Windows Live messenger and we would just use skype?

  • http://doctorwhofan98.wordpress.com/ doctorwhofan98

    I hope what @485429d21afdd4c03ad874e7ffc85530:disqus says isn’t true. I hope Windows Live Messenger doesn’t become Skype. In fact, I hope it’s the other way round. They should keep the Windows Live branding.

  • http://alexsimkin.tumblr.com/ Alex Simkin

    I hope what @485429d21afdd4c03ad874e7ffc85530:disqus says isn’t true. I hope Windows Live Messenger doesn’t become Skype. In fact, I hope it’s the other way round. They should keep the Windows Live branding.

  • http://webscannotes.com Lem

    It could be possible that while Microsoft foresees that voice and video
    streaming could become a huge thing in business communications (Lync),
    games (XBox and Kinect), and phones, Microsoft does not think that voice
    and video streaming would become a large part of instant messaging, and
    thus assigns lower priority for integration with Windows Live
    Messenger.

    • Damaster – LiveSide.net

      Doubt it. One of the biggest marketing points of Windows Live Messenger 2011 is it’s “HD video chat” capabilities. And given the Video Kinect (via the Messenger service) is currently Xbox’s only video chat service using Kinect, not sure how the Skype deal will play out. Will they integrate the two? Or include competing services into one?

  • http://webscannotes.com Lem

    It could be possible that while Microsoft foresees that voice and video
    streaming could become a huge thing in business communications (Lync),
    games (XBox and Kinect), and phones, Microsoft does not think that voice
    and video streaming would become a large part of instant messaging, and
    thus assigns lower priority for integration with Windows Live
    Messenger.

    • damaster

      Doubt it. One of the biggest marketing points of Windows Live Messenger 2011 is it’s “HD video chat” capabilities. And given the Video Kinect (via the Messenger service) is currently Xbox’s only video chat service using Kinect, not sure how the Skype deal will play out. Will they integrate the two? Or include competing services into one?

  • Anonymous

    I hope they intergrate it into Windows Live Messenger. Windows Live Messenger could use the video capability and the voicemail service.

    • http://doctorwhofan98.wordpress.com/ doctorwhofan98

      @JSYOUNG571:disqus I hope that happens!!

  • JSYOUNG571

    I hope they intergrate it into Windows Live Messenger. Windows Live Messenger could use the video capability and the voicemail service.

    • http://alexsimkin.tumblr.com/ Alex Simkin

      @JSYOUNG571:disqus I hope that happens!!