Lots of questions still surround Microsoft's $8.5 billion acquisition of Skype.
Did Microsoft pay too much? What does this mean for Skype's competitors? And how will the software giant change the VOIP service we know and love?
After Microsoft CEO Steve Ballmer and Skype CEO Tony Batesdiscussed the deal with the press, we have a better idea of what Microsoft hopes to gain.
After separating itself from eBay in 2009, it was clear that Skype was well on its way to an IPO. But Ballmer saw more value in buying the company outright ( Acer as07b41 Battery ). Microsoft tendered an unsolicited offer in April. When Bates saw that offer, he made the decision to sell.
So why was it such a good fit for Ballmer? During its press conference, Microsoft reiterated three talking points:
Skype's immense size — 170 million active users — and growth plan.
The fact that 40% of Skype's activity is video.
Skype's role in mobile communications.
It is in this third area — mobile — that Microsoft has the most to gain.
Skype: Microsoft's Key to the Wireless Carrier Kingdom?
Microsoft never seemed to miss an opportunity to tout the "170 million active users" figure in relation to Skype. It's clear the user base attracted Microsoft to the company.
Microsoft, of course, is no stranger to huge user numbers. But momentum is shifting from the PC to smartphones and tablets. The lead that the software giant has on the desktop won't magically translate to these emerging platforms –as the success of iOS and Android and the relatively poor start for Windows Phone 7 proves.
This is where Skype's role as a cross-platform tool — both on the desktop and on mobile devices — becomes attractive. Skype instantly gives Microsoft a better foothold into platforms and ecosystems that it doesn't control, in a market where it is not a leader.
Moreover, it also gives the company access to carriers that might not be Windows Phone 7 operators now, but want to use Skype. That's not to say Microsoft will use its leverage with Skype to try to force carriers to adopt Windows Phone 7 (at least, not yet). This is more about building relationships, especially important in the context of the Microsoft/Nokia partnership.
It's no secret that Nokia's presence in the North American smartphone market is nonexistent. that's one reason Nokia partnered with Microsoft. But when Nokia brings its first Windows Phone 7 handsets to market in a year or so, solid relationships with carriers by way of Skype can only help Nokia gain traction. And a successful Nokia makes Microsoft more successful by proxy.
Prepare for Video Ads in Your Skype
A very small percentage of Skype's 170 million users actually pay to use the service. Skype's IPO plans indicate that this was not a pressing concern.
But the company was looking to expand video advertising within Skype itself — and CEO Tony Bates mentioned video ads numerous times during the press conference.
Under Microsoft, Skype's advertising muscle is far stronger. Microsoft has spent lots of time investing into ad platforms with Bing and the Windows brands, and that is sure to extend to Skype.
Skype users — especially those who use Windows — should expect to see video ads and portal homepage information coming to the app in the future. This makes sense. If Google or Facebook had purchased Skype, chances are they would take a similar approach.
Skype and the Enterprise: Wait and See
One of the final questions posed to Ballmer and Bates was what impact Microsoft will have on Skype's enterprise ambitions.
During the past year, Skype has tried gaining traction in the enterprise space. While it is virtually unrivaled in the consumer space, Skype is hardly a key player in business. Skype's infrastructure is less secure and less stable than offerings from competitors like Cisco.
When Skype experienced a major meltdown back in December, the company's explanations for the outagemight have been good enough for consumers who use the service for free ( Asus a32-f5 Batteries ), but would have been unacceptable for business and corporate customers. Meanwhile, Microsoft is entrenched in enterprise and has developed its own tools for internal corporate communications.
On the call, Ballmer skirted the question of how Microsoft would integrate Skype into its corporate solutions, only saying that he saw lots of potential to connect secure corporate communication with friends-and-family usage. That doesn't mean that the technology can't be adapted for the enterprise — in fact, we're sure that's is part of Microsoft's long-term goal. But today's Skype will likely differ significantly from the Microsoft Skype product aimed at enterprise users in the future.
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