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Microsoft Buys Skype for $8.5 Billion: So What Happens Now?

The VAR Guy

May 10, 2011

2 Min Read
Microsoft Buys Skype for $8.5 Billion: So What Happens Now?

After days of rumors, Microsoft has acquired Skype — the VoIP, instant messaging and video conferencing system — for roughly $8.5 billion. The VAR Guy has mixed emotions about the Microsoft-Skype combo. On the one hand, there are potential Skype synergies for channel partners that focus on Microsoft Lync. And Microsoft also gets a killer application for Windows Phone 7, Xbox, and other platforms. But on the other hand, The VAR Guy wonders if Microsoft will properly manage Skype’s assets. Here’s the update.

First, The VAR Guy needs to point you to some details from The Wall Street Journal, which notes:

  • Skype was launched in 2003 and gradually gained popularity for its ability to make cheap or free VoIP phone calls.

  • eBay Inc. purchased Skype in 2005 for $2.6 billion in cash and stock.

  • eBay gave up on Skype in 2009, selling a 70% stake to a group of technology investors.

  • Skype has produced little net profit since 2003. Last year the company posted revenue of $860 million and $264 million in operating profits, but still had a loss of $7 million. The company had $686 million in long-term debt as of Dec. 31.

No doubt, Skype could give Microsoft’s Unified Communications channel partners a boost. Microsoft in 2010 relaunched Office Communications Server as Lync. And more recently, Microsoft has been building Lync Online into Office 365, a cloud platform that’s expected to launch around July 2011 or so. (Officially, Microsoft says Office 365 will debut sometime in 2011.)

Moreover, Skype could be a killer mobile application for Microsoft’s fledgling/struggling Windows Phone 7 and tablet strategies.

Still, Skype’s success under Microsoft ownership is far from guaranteed. The software giant is running in so many different directions these days. Can Microsoft really integrate Skype into all of its various platforms — Windows, Windows Phone 7, Xbox, Lync, Exchange, SharePoint, Office 365…

Hmmm… The VAR Guy will be watching.

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