Microsoft confirms $8.5B acquisition of communications service Skype

Posted:
in General Discussion edited January 2014
Microsoft on Tuesday confirmed that it plans to acquire Internet communications service Skype for $8.5 billion in cash to support services like Xbox and Windows Phone.



The two companies announced they have entered a definitive agreement that has been approved by the boards of directors of both Microsoft and Skype. In a statement, Microsoft said the combination will extend Skype's world-class brand and the reach of its networked platform, all while enhancing Microsoft's existing portfolio of real-time communications products and services.



"Skype is a phenomenal service that is loved by millions of people around the world,? Microsoft Chief Executive Steve Ballmer said. "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."



Under the deal, Skype will become a new business division within Microsoft, and Skype CEO Tony Bates will assume the title of president of the Microsoft Skype Division. In that role, he will report directly to Ballmer, the head of Microsoft.



'Microsoft and Skype share the vision of bringing software innovation and products to our customers," Bates said. "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."



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. Skype applications are currently available for both iOS devices and the Mac.







Founded in 2003, Skype was acquired by eBay for $2.6 billion in September 2005, and then acquired by an investment group led by Silver Lake in November 2009. In the last 18 months, Skype has reportedly increased monthly calling minutes by 150 percent, developed new revenue streams and strategic partnerships, acquired the intellectual property powering its peer-to-peer network, and recruited a new senior management team.



Rumors of a Skype deal surfaced earlier in the week. Sources told The Wall Street Journal that Google and Facebook were also seen interested in acquiring the company.



Apple's own FaceTime standard for video chat has seen great success since it debuted on the iPhone 4 last year. FaceTime support now spans across Apple's product lineup, including the iPod touch, iPad 2, and Mac hardware.
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Comments

  • Reply 1 of 174
    gatorguygatorguy Posts: 24,084member
    This probably bodes ill for Facetime.



    Skype will likely be the standard now with availability across several platforms and devices. With Facetime still restricted to only iOS devices, it really will be of limited use to those trying to stay in touch with extended family and friends often using non-Apple devices.



    I have no idea why Apple never bothered following thru with making Facetime an open standard as promised, but with MS purchase of Skype I wouldn't be surprised to see Apple let it quietly vanish.
  • Reply 2 of 174
    solipsismsolipsism Posts: 25,726member
    That just seems crazy on all levels.
  • Reply 3 of 174
    ghostface147ghostface147 Posts: 1,629member
    FaceTime never had a chance, but I've never used skype either. Good luck.
  • Reply 4 of 174
    How long before we see that "blue screen of death" on our Skype App?



  • Reply 5 of 174
    aplnubaplnub Posts: 2,605member
    You mean the blue screen of voice.





    I have two paid Skype accounts. I hate that MS is involved now and I hope the service gets better instead of going backwards.
  • Reply 6 of 174
    prof. peabodyprof. peabody Posts: 2,860member
    Quote:
    Originally Posted by AppleInsider View Post


    ... "Skype is a phenomenal service that is loved by millions of people around the world,? Microsoft Chief Executive Steve Ballmer said. "Together we will ...



    ... destroy it's utility, scare away all non-windows customers, open vast security holes and generally f*ck things up."
  • Reply 7 of 174
    backtomacbacktomac Posts: 4,579member
    Quote:
    Originally Posted by solipsism View Post


    That just seems crazy on all levels.



    Not sure why they paid 8.5 billion for Skype when they could have gotten it for 10 billion.
  • Reply 8 of 174
    prof. peabodyprof. peabody Posts: 2,860member
    Quote:
    Originally Posted by Gatorguy View Post


    This probably bodes ill for Facetime.



    Skype will likely be the standard now with availability across several platforms and devices. With Facetime still restricted to only iOS devices, it really will be of limited use to those trying to stay in touch with extended family and friends often using non-Apple devices.



    I have no idea why Apple never bothered following thru with making Facetime an open standard as promised, but with MS purchase of Skype I wouldn't be surprised to see Apple let it quietly vanish.



    It could also be the reverse.



    Facebook was looking for a video component, if MS manages to force them onto Skype then FaceTime is in trouble. If Facebook on the other hand started using FaceTime, Skype would quickly become a seniors-only Windows-only affair.



    Also, Apple hasn't released anything for non-Apple platforms, but they indicated they were going to. If there is a FaceTime for Windows then the battle is truly on and I like FaceTime's chances.
  • Reply 9 of 174
    ifailifail Posts: 463member
    Quote:
    Originally Posted by Gatorguy View Post


    This probably bodes ill for Facetime.



    Skype will likely be the standard now with availability across several platforms and devices. With Facetime still restricted to only iOS devices, it really will be of limited use to those trying to stay in touch with extended family and friends often using non-Apple devices.



    I have no idea why Apple never bothered following thru with making Facetime an open standard as promised, but with MS purchase of Skype I wouldn't be surprised to see Apple let it quietly vanish.



    Facetime just isn't that big a deal like Apple made it out to be. I think ive used it 3 times in total, twice on my iPad 2 and once on my macbook. Everyone i know who owns a mac has Skype to video chat and thats what we all use, and the best thing is it isnt platform specific.



    It would have been nice to see Facetime on more than Apple products, and while expanding out costs money, it would have been a perfect way for them to move more iAds to offset the costs.



    I am quite intrigued at how MS will implement this into Xbox and Kinect, maybe they'll show something at E3.
  • Reply 10 of 174
    mynameisjoemynameisjoe Posts: 170member
    I predict that now that Skype is owned by Microsoft, it will

    lose even more money each year.
  • Reply 11 of 174
    irontedironted Posts: 129member
    I am sure the carriers will be mad with Microsoft, and wonder whether they will sell Windows 7 Phones now.
  • Reply 12 of 174
    jcozjcoz Posts: 251member
    Quote:
    Originally Posted by backtomac View Post


    Not sure why they paid 8.5 billion for Skype when they could have gotten it for 10 billion.



    LOL.



    8.5 billion for for a service that loses money annually.
  • Reply 13 of 174
    The article mentioned that eBay bought Skype for $2.6 billion. What did they sell it for?
  • Reply 14 of 174
    sevenfeetsevenfeet Posts: 465member
    I'm still trying to figure this deal out. eBay unloads Skype for a mere $2.75b after paying $2.5b for it and not two years later, Microsoft pays $8.5b for it? Seriously? I mean, the AI article speaks of their improved business model but is it enough to more than triple their valuation? We all know that Microsoft is good for the cash, but I can't help think that they ended up in a bidding war with Facebook and Google and wound up overpaying.



    It's also an interesting play for them in terms of cell-phone carriers. They never liked Skype anyway and now Microsoft, the maker of a major phone platform owns them. Maybe Microsoft considers having Skype will be a good negotiation tactic but regardless, things get bumpy from here.
  • Reply 15 of 174
    nofeernofeer Posts: 2,427member
    This is a defensive move paid $$$$ to keep FB AWAY

    And feed ms 7 and nokia

    Next up

    Rim

    Data center I think we are thinking too narrowly

    Data center so apple doesn't have to use 3rd party servers

    Hmmmm



    Apple voice

    Apple search

    Apple mvno

    Apple universe

    Not reliant on others

    And no more parasites leaching apple customers data

    Customer data is key to this

    It's huge
  • Reply 16 of 174
    poochpooch Posts: 768member
    when you can't compete in a market, buy in ...
  • Reply 17 of 174
    addicted44addicted44 Posts: 830member
    If Apple expands FaceTime to cover everything Skype does (Audio only calls and multiplatform, mostly), it will be able to beat Skype quite easily, IMO. Especially now that Skype is aligned with MS, and will have inevitable transitional pains.
  • Reply 18 of 174
    saareksaarek Posts: 1,520member
    I think most of us remember iChat, damn I so badly wanted to use that application and in so doing dump MSN messenger and Skype, but it didn't happen.



    It didn't happen because two thirds of the people whom I have online contact with do not own a Mac and so could not use iChat.



    I still feel to this day that Apple wasted a good opportunity and are simply doing the same with Facetime.



    Facetime has many benefits over Skype or MSN but until they release a Windows version or come to some type of partnership with someone who will bring it to Windows it's going to be a lame duck. \
  • Reply 19 of 174
    jmmxjmmx Posts: 341member
    There goes Skype



    Will MS axe compatibility between OS versions? Will they try to close out iOS and Mac OS? Put out special features for Windows only?



    This is how they gained dominance on the desktop, using IE to marginalize competing OS and browsers.



    It is a sad day for longtime Skype users.
  • Reply 20 of 174
    jmmxjmmx Posts: 341member
    Quote:
    Originally Posted by saarek View Post




    I still feel to this day that Apple wasted a good opportunity and are simply doing the same with Facetime.



    Facetime has many benefits over Skype or MSN but until they release a Windows version or come to some type of partnership with someone who will bring it to Windows it's going to be a lame duck. \



    -- While Jobs advertised that FaceTime would be an open standard for others to implement - it appears that this is not the case. My recent inquiries to Apple on the subject were rebuffed with "No news"

    --
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