Microsoft's recent purchase of Skype for $8.5 Billion raised some eybrows, not only for it's lofty price (70% of Skype had been purchased by Silver Lake Partners for only $2.5 Billion back in 2006), but also because pundits were wondering what the heck would a Windows software and video game console company do with essentially a VOIP services provider?
While the debate rages on, there could be some excellent possibilities here for Microsoft. The concensus is that Microsoft wanted access to Skype's 600 million users - not an insignificant number - for the ability to cross-sell products and online services that the company is developing. Also, according to tech site Gigaom, Skype instantly boosts Microsoft's position in the online communication and collaboration market. This is an area where Microsoft leaders Steve Ballmer and Bill Gates see future growth and development possibilities - especially leveraging off of the X-box, Windows Mobile and Outlook platforms. This peer-to-peer connectivity will deliver a cohesive user base to which Microsoft can use to develop new social networking applications, offer cloud-like services based on it's Windows and Office software, and lock up tons of inventory for its Double-click display advertising business (some say this could generate over $350MM in incremental annual revenue.) The deal will also give Microsoft more leverage with wireless providers and mobile technology companies such as Nokia - a key requirement for boosting it's struggling mobile business.
Given the number of new users that Microsoft just acquiredm, as well as the number of strategic options that Skype provides, I feel that this purchase was well calculated, bold, and will ultimately be a long-term winner.
While the debate rages on, there could be some excellent possibilities here for Microsoft. The concensus is that Microsoft wanted access to Skype's 600 million users - not an insignificant number - for the ability to cross-sell products and online services that the company is developing. Also, according to tech site Gigaom, Skype instantly boosts Microsoft's position in the online communication and collaboration market. This is an area where Microsoft leaders Steve Ballmer and Bill Gates see future growth and development possibilities - especially leveraging off of the X-box, Windows Mobile and Outlook platforms. This peer-to-peer connectivity will deliver a cohesive user base to which Microsoft can use to develop new social networking applications, offer cloud-like services based on it's Windows and Office software, and lock up tons of inventory for its Double-click display advertising business (some say this could generate over $350MM in incremental annual revenue.) The deal will also give Microsoft more leverage with wireless providers and mobile technology companies such as Nokia - a key requirement for boosting it's struggling mobile business.
Given the number of new users that Microsoft just acquiredm, as well as the number of strategic options that Skype provides, I feel that this purchase was well calculated, bold, and will ultimately be a long-term winner.
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