Microsoft Corp. (Nasdaq: “MSFT”) and Skype Global S.à r.l today announced that they have entered into a definitive agreement under which Microsoft will acquire Skype, the leading Internet communications company, for $8.5 billion in cash from the investor group led by Silver Lake. The agreement has been approved by the boards of directors of both Microsoft and Skype.
The acquisition will increase the accessibility of real-time video and voice communications, bringing benefits to both consumers and enterprise users and generating significant new business and revenue opportunities. The combination will extend Skype’s world-class brand and the reach of its networked platform, while enhancing Microsoft’s existing portfolio of real-time communications products and services.
With 170 million connected users and over 207 billion minutes of voice and video conversations in 2010, Skype has been a pioneer in creating rich, meaningful connections among friends, families and business colleagues globally. Microsoft has a long-standing focus and investment in real-time communications across its various platforms, including Lync (which saw 30 percent revenue growth in Q3), Outlook, Messenger, Hotmail and Xbox LIVE.
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.
It seems as if part of the reason Microsoft made such a large offer over Skype’s original $7 billion asking price was to make sure that Google or Cisco Systems didn’t get their hands on the service. Google already has the fairly popular Google Voice as well as the fairly new ability to make VoIP calls and video calls right inside of Gmail, you can see why Microsoft wouldn’t want them to also take control of Skype’s user base as well.
Hopefully Microsoft’s first mission with Skype will be to improve call quality. While Skype’s video is probably the best around, their call quality leaves a bit to be desired. Second, please do something about the cheesy UI, it’s just horrible and was made even more horrible by the last update. There’s something to be said about beauty in simplicity.
I think this is a good buy for Microsoft if they are actually serious about leaving Skype basically intact. With their resources they definitely have the ability to elevate Skype even more because, like it or not, it’s definitely the industry leader right now. It’ll be interesting to see what, if any, improvements Microsoft makes to it.