Who Took Microsoft Snipe, err Skype Hunting

May 10th, 2011 by · Leave a Comment

So ever since Om broke the rumor on Sunday, the word was that Skype was about to get bought by a big internet powerhouse.  Some said the buyer was Facebook, some said Google, but it turned out to be Microsoft.  The pricetag was a whopping $8.5B, and it obviously takes Skype's IPO off the table.  But does it make any sense at all?  Well, for Skype it sure would.  $8.5B for a business that has yet to break $1B in revenue and hasn't found a way to turn 600M+ users into a profit?  Don't get me wrong, I love Skype - I use Skype - I depend on Skype.  But $8.5B?  I guess eBay should have held out for a little while longer, eh?!  Well, I guess they did, since they still own 35% of the company, but still - the $1.9B they got for the first 65% pales compared to the $2.55B they got for the final 35%.

Just what on Earth is Microsoft going to do with Skype?  Bundle it with Windows?  *shudder*.  Ok, Windows Phone then - but Skype works on lots of platforms, so having it on Windows Phone doesn't really change much does it?  Microsoft faces growing irrelevance in a tablet world dominated by iPads and Android devices that satisfy the everyday browsing, emailing, and [insert your favorite social app verb here] that people have for so long underutilized powerful, OS-heavy desktop computers for.  So they can:  a) accept their inability to generate buzz and their own middle age, b) finally build something that makes them more relevant, or c) use their cash flows to buy something that isn't.  And Skype?  Well, Skype fits c) and is available.  And of course, it does videoconferencing.

But whatever their intentions, Skype as a Microsoft property would bring on a severe bout of cognitive dissonance.  From the ultimate outsider challenging the establishment to the right arm of the ultimate insider who wants to reconquer the establishment it once ruled with an iron fist...  Maybe it's a brilliant move?  For those of us who have been with Skype since the beginning, it's just hard to process the concept.

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Categories: Mergers and Acquisitions · VoIP

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