The Wall Street Journal has a pretty solid record of having inside information on the tech industry and they’re now reporting that Microsoft is close to sealing a deal with Skype for $7b. This deal has plenty of critics already because Microsoft already has Messenger and Lync which are essentially their versions of Skype but without the brand name or reach. But why would they do this? I mean, Skype is running at a loss currently. Well it’s for many of the same reasons that Google bought YouTube (which was only $1.56b). Even if they take losses in these areas, the presence that it gives these tech companies is huge. Not only would this legitimize Microsoft’s web and mobile presence, it also prevents a key asset from falling into the hands of a dangerous enemy. yeah, Google and Facebook were in talks to buy Skype too. And of course, if Google owned Skype that would be a painful reality for Microsoft to contend with as Google would continue their march to attract users for services. This is much like the Nokia deal where the price has to be considered in the long run and not only can it bring some cred to Microsoft but it also prevents them from taking a huge hit.

So if this is true, is Ballmer’s spending spree good offense or good defense? Either way, I think it’s brilliant if they can pull it off. Of course, “Negotiations were wrapping up Monday evening, and a deal could still fall apart, the people cautioned” but I recall them saying that about Nokia as well…

7 COMMENTS

  1. 7 billion fucking dollars? I’m sorry, but that is way, way too much damn money for Skype. That’s almost twice was Facebook was reported to offer.

  2. By the way, I do like this purchase by Microsoft. It has a lot of advantages, and combining the best features of Live Messenger with Skype, and integrating it into WP7 will be a killer combo. But not at this price.

    As for folks worried about Skype being exclusive to WP7 and Windows, that’s highly doubtful. Of the big three companies, Microsoft is by far the most platform agnostic. This will be continue to be available for iOS, Android, Blackberry, WebOS, and Symbian.

    By the way Doug, I’d like to formally apologize for my mean spirited comments towards you when I first started posting here. They were uncalled for. Yes, we will spar over topics in the future, but it should never be personal.

  3. If Microsoft wants to increase presence in the business phone service market, this might be the best way. Having a familiar video conferencing tool might boost Lync usage, which in turn wil lead more companies to switch over from tradtitional comm solutions. Will be interesting to see how it plays out.

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