The Microsoft-Skype purchase

11 May 2011

LONDON, UK: Despite scepticism at Microsoft's ability to handle big acquisitions, Redmond is a better home for Skype than some of the company's other rumoured suitors. Google already has Google Voice, minimising the impact of such an acquisition. Facebook was another potential destination, but Informa believes the synergies between these two companies to be almost as over-estimated as those between Skype and eBay.

If the oft-quoted mantra that most people are actually only friends with about 10% of their Facebook friends is true, then voice calling within the service makes little sense.

Microsoft, on the other hand, has numerous ways in which it can make use of Skype: video calling for Windows 7 Phones (and a competitor to FaceTime), offering a true PC-based VoIP service with Windows Live Messenger, voice chat in Xbox Live and, of course, strengthening its enterprise communications proposition.

Microsoft undoubtedly has over-paid for Skype in the short-term, but potentially not in the long term. Buying Skype gives Microsoft the ability to do whatever it wants with voice to an audience of 700 million users. This kind of scale does not come cheap.

It was announced yesterday, that Microsoft is to buy Skype for US$8.5 billion. Bloomberg says the deal might strain Microsoft's relations with AT&T and wireless operators.

About the author

[[http://blogs.informatandm.com/authors/giles-cottle/ Giles Cottle]] is senior analyst at Informa Telecoms & Media.