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Microsoft’s $8.5bn “shared vision” for Skype

11th May 2011
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Microsoft’s acquisition of Skype for $8.5bn in cash from the investor group led by Silver Lake promises to increase the accessibility of real-time video and voice communications.

The deal is likely to extend Skype’s reach, while enhancing Microsoft’s existing portfolio of real-time communications products and services, the companies said. Some commentators, however, questioned whether Skype was worth that much - and whether it would prosper under the Microsoft corporate umbrella.

With 170m connected users and who used 207bn minutes of voice and video conversations during 2010, Skype has become the leading vehicle for online connections between friends, families and business colleagues globally.

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

Skype will become a new business division within Microsoft, led by Skype CEO Tony Bates who will report directly to Microsoft CEO Steve Ballmer. The first objective of the new outfit will be to support Microsoft devices like the Xbox and Kinect, Windows smartphones and a wide array of Windows devices.

Microsoft in turn will connect Skype users with Lync, Outlook, Xbox Live and other communities. Microsoft will also continue to invest in and support Skype clients on non-Microsoft platforms.

Since 2005 Skype has operated a partnership with The Cloud that offers low cost WiFi access and Internet voice calls at 6,000 of the Cloud's UK and Swedish hotspots. The service automatically connects users to a Skype Zone as soon as they turn on their Wi-Fi enabled device in a Cloud hotspot for a monthly subscription of €6.18 per month, or a one-off fee of €2.50 for a two-hour connection.

There was no mention in official statements about whether the Skype Zone service would be affected by Microsoft’s acquisition, but Skype Zones client for Windows computers available immediately and can be downloaded from the Skype Store.

“Microsoft and Skype share the vision of bringing software innovation and products to our customers,” said Bates. “Together, we will be able to accelerate Skype’s plans to extend our global community and introduce new ways for everyone to communicate and collaborate.”

Microsoft CEO Steve Ballmer added: “Skype is a phenomenal service that is loved by millions of people around the world. Together we will create the future of real-time communications so people can easily stay connected to family, friends, clients and colleagues anywhere in the world.”

The website was less fulsome. Editor Krishnan Subramanian suggested the deal will mean “Skype as we know it today, as a great consumer communication app, may cease to exist. I have no evidence to back up this claim but this is my hunch feeling based on Microsoft’s past.”

He continued: “Skype for Linux may end up in deadpool. Given Microsoft’s history with Linux, I am fairly confident that Skype’s Linux support will be ending soon. While Skype video chat for Android is already dead on arrival.”

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