How Many Times Will Skype Be Acquired For Too Much Money By Big Tech Companies With Little Strategic Synergies?
from the the-big-huh? dept
You may recall, back in 2005, that the tech world let out a massive "Huh? when eBay acquired Skype for somewhere around $2.6 billion. eBay kept insisting there were synergies there, and lots of people tried to puzzle out what those might be. Calling people to discuss auctions? Auctions embedded in your phone? There was some vague talk about China, but it amounted to "lots of people use Skype in China," and didn't get much further than that. Just a couple years later, eBay was already writing off the supposed synergies and then gave up looking for the synergies altogether. Not so long ago, it spun the company out, and there were plans for an IPO.Just a few days ago, there were rumors that both Facebook and Google were considering buying Skype at around $3 or $4 billion. In both cases, you could make out some potential synergies. Facebook has become a huge communications platform, and adding more voice capabilities could be compelling. Google, obviously, has Google Voice and owns Skype-clone Gizmo.
However, at the last minute, it appears that Microsoft swooped in and more than doubled the asking price, paying $8.5 billion. And, we're left with deja vu. It seems we're not the only one asking how this makes sense. It certainly has all the earmarks of a big company with too much cash feeling the need to do something to be considered relevant, especially after hearing that two of the newer darlings in the tech world were considering the buyout themselves.
Are there synergies here that make sense? Well, certainly more than existed with eBay. But enough to make it worth so much more to Microsoft than Facebook or Google? I can't see it. Also, almost everything I can think of where Microsoft might integrate with Skype would likely make the product more annoying and less valuable. And while Skype is definitely a great product -- I use it all the time -- and usage has steadily grown over the years, the company is still having trouble finding profits. $8 billion is a lot to spend on a company that keeps using up the red ink on its income statements.
Perhaps Skype just puts something in the water it serves in conference rooms that makes big tech companies go loopy, increasing how much they're willing to pay and seeing magic synergies where none really exist.
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Filed Under: acquisitions, voip
Companies: ebay, facebook, google, microsoft, skype
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I know why!
Of course, Skype has a big disadvantage: many mobile network operators will want to block Skype altogether from mobile phones and other devices, since internet has a fixed price but phone calls are paid for per call. So Microsoft gained something that's not very welcome on mobile devices. Great way to break theit Windows Mobile system! :-)
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I suspect they're more interested in some type of integration with Exchange Server and possibly Outlook. I'm just not quite sure how much money that's worth. It could potentially become a trump card for the mobile market. Apple and Google aren't too worried about Windows Phone features, but they do need to maintain a certain level of compatibility with Exchange Server to compete for business customers. Likewise, corporate customers have a lot more influence on mobile carriers than Microsoft. If they could get all three on their side, if somewhat unenthusiastically in the case of Apple and Google, maybe they're suddenly in a position to push Skype on mobile networks. That's a lot of ifs and maybes, but it also seems to match a lot of Microsoft's moves in recent years.
Or maybe Microsoft doesn't have any idea what to do with Skype and just wants to keep them away from Google and Facebook. With most companies I'd probably say the simpler answer makes more sense. In Microsoft's case it seems like more of a toss up.
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shares will tank
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If Microsoft buys Skype, it'll run on Windows (who uses that anymore?!), the Xbox, and whatever crap phone they're trying to sell.
It'll be non-existent in five years or less.
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So yes, they will probably make Skype Windows-only, an entirely stupid but predictable decision.
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Response to: Ima Fish on May 10th, 2011 @ 5:43am
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eBay sure looks smart now
I think MS will be looking to offer it as a service with their phone platform similar to Google Voice. But now that it is owned by a mobile phone OS creator, watch the other phone OS owners shun it if they can.
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Re: eBay sure looks smart now
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voice is so 1998
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Re: voice is so 1998
See!? My disgust with your trolling antics barely comes through at all.
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Re: voice is so 1998
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It's a great service
I can also call anyone in the US and I think Canada (haven't looked into it since I don't know anyone there, yet) without any additional charges.
I can do this from my computer or from my iPhone at any wifi hotspot (helpful again if the cell signal is not too great).
I give out my Google Voice number as my primary contact, and that service rings my cell and my Skype.
Not to mention all my friends from Facebook and gaming friends who have Skype can call me direct Skype to Skype without them having purchased a number and $3 a month subscription.
My only concern is what changes Microsoft will make. I am perfectly happy with the service, but if they jack up the monthly fee, I will find some other solution.
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EEE or ...profit?
Bad: Embrace, Extend, Exterminate. Microsoft made an under-the-table deal with the wireless carriers that they'd acquire Skype and render it useless in the mobile space in exchange for the carriers pushing Windows Phone onto users who want Androids and iPhones.
Good: Microsoft genuinely interested in integrating voice into Windows. (don't laugh, stay with me) Right now, Skype and VoIP through a computer are still small when compared to traditional phones/mobiles. Get enough regular non-internet-savvy users into voice chat using something other than a phone number. Integrate Skype through Messenger, through Windows Phone, and through their business apps like LiveMeeting and Communicator. Microsoft just might have the clout to really challenge the telcos.
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Re: EEE or ...profit?
Microsoft has a huge Unified Communications (UC) division. Skype will be a good, widely used and popular addition to the UC suite. While UC has so far targetted mostly corporate clients, Skype will allow Microsoft to expand to a more individual user base. Google has made a big foray into communications with Google Voice/Google numbers. Apple, Facebook the other two dominant tech players are big into communication too.
Don't be surprised if, Microsoft lets Facebook integrate Skype for an even stronger search relationship.
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And an even huger of botching things with me-too products. So much for bias.
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Skype also has IM, videochat and desktop-sharing functionality built in. My company's primary product trainer is located 2000 physical miles from the home office, but still brings new hires up to speed on the product with effective demonstrations via Skype. I do the same thing with Windows Remote Assistance when my mom can't find a file on her computer. I think there are plenty of parallels and overlaps, given how much MS really does these days.
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It also said that it would be planning on connecting Skype into Outlook. For corporate clients this would be a great advantage.
Yes, M$ is a huge company, and b/c it's so huge you can't see all of it. Assuming that they won't be able to put this technology to good use is rather naive on your part Mike.
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Consider this
Skype to be integrated into every windows PC in the world with a service pack update. This now grows Skype's accessibility and awareness virtually over night. Because it is there, it will be used. Keep it as a cross platform service while having it as a "standard" feature in Windows.
Just a thought.
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Telecoms everywhere are annoyed right now I believe.
If there is a company that can f. them up is Micro$oft.
For some reason I remembered this music "Tongue Tie" from the Red Dwarf Series.
http://www.youtube.com/watch?v=a3t3IKlXqFU&feature=related
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skype is a new form of ponzi scheme
2001 kazaa steals all the music in the world
2003 kaza gets sued for stealing all the music in the world
kazaa dudes hide out in eastern europe
kazaa dudes develop skype
2005 ebay buys skype for billions
ebay unwittingly pays off kazaa lawsuits
achievement unlocked: ponzi scheme
2008 ebay and skype don't get along
ebay realizes it was scammed
spins off skype into it's own company
2011 MSFT buys skype
achievement unlocked: double ponzi
i've got to hand it to the guys at skype. 8 years is a lot of time to invest in a con, and based on the billions spent on it, the long con clearly pays off.
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Re: skype is a new form of ponzi scheme
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.net passport Yay!
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Not such a silly idea....
With a bit of tweaking, MS could offer companies a secure hosted voice and video conferencing facility that is open to external parties and very easy to use. Users would be able to make and receive voice and video calls to any other company that has the MS Skype service enabled on the desk top or just voice calls to anyone with a phone line. With integration into other services like share point and live meeting, the possibilities are endless.
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xbox!
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yipee
They are a dinosaur who rode to high profits on a monopoly of PC OS's. I'm fed up with them crushing small companies who look like a threat because their software is better, maybe when they are gone we might get less bloat and more security.
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Just yet another bubble, waiting to bust. No way I'd even invest a penny in them, lol.
But hey, I could well be very wrong. Facebook *might* have had some potential if not for all the privacy issues. I have a facebook account, but I would not dream of using it to 'login' or otherwise bank *anything* on it.
I see a lot of pages now that say 'login with your facebook account' - ummm, no way. I do NOT trust facebook.
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My view of the future...
The winners of this time period will be the companies that own the most popular/widely used communication and search programs. This is why Google created phone, email, TV, they are even buying portions of the "Dark Fiber Network".
Because Google already released their version of phone (FOR FREE) i dont see them buying skype.
Facebook however, it sounds like a match to me. I want a call button below everyones picture.
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Overlooking many benefits
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This seems a little obvious to me...
Skype actually seems like a much more natural addition to the MS quiver. Via plugins or a new client app, Skype could easily integrate into a small business or larger business plan, especially with Skype's commercial offerings, such as Skype for Business. Now, with your MS Office license, you could have deep integration with Skype for collaboration and sharing.
Throw in some Win Phone 7 integration, and now we're cooking with fire. There would be large advantages for small businesses already running an MS shop.
I see good things in the future from this purchase, provided that MS doesn't kill off Skype for other platforms.
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Productivity is the latest IT push and with the corporations trying to force people to telecommute, there's a huge market for someone who can provide a solution that makes you feel like you're in the office.
Buying Skype gives Microsoft the ability to greatly increase their user base, since many more users are familiar with Skype than Webex.
Microsoft buying skype appears to me to be much more aimed at Cisco than Google.
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Has anyone thought about patents?
I suspect that patents are the real reason Microsoft bought Skype.
I see a purchase like this one, I immediately think "Intellectual Ventures".
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dont forget a couple other areas too:
overhaul live messenger take the best of both parts and create a single better product (yes, i realize im talking about microsoft... but hey, it could happen)
and the biggest point outside of corporate use is xbox.
they will add it to the 360 thats a no brainer. but the next gen console is already in development. now is the time to replace the (lets face it) piss-poor excuse for XBL live chat with something that actually works and works well with little bandwidth overhead. and i believe they are looking at skype to fill that role. i find it just too coincidental that they are buying it right now out of the blue now that reports are starting to filter in that the initial dev consoles are starting to make their way out to game devs.
if it were strictly about corporate use and just having it because of name recognition, they wouldnt have paid as much as they did. they are banking on having it for something big that they need right now and the next gen xbox is the next big thing they are working on followed by win8 which will probably hit the market within 6 months of each other sometime mid to late 2012.
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A fool and his money
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MS Skype Purchase
Business app integration
Gaming Division integration (XBox/Games For Windows)
Hardware/Software Phone integration
Windows 8 integration (where it is desperately needed, especially considering it is more highly reliant on online components than previous versions)
Windows Live!/"value add" app integration
Licensing access to Facebook
Giving the NSA a free, warrantless backdoor into all of the encrypted conversations
And those are just what I've come up with off the top of my head.
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