Wednesday, May 11, 2011

Microsoft's Desperate Acquisition of Skype...

When news broke yesterday that Microsoft is acquiring Skype for $8.5 billion, the business and technology communities were all abuzz. It's certainly gigantic news in the industry, but how much will it really matter?

The prevailing wisdom, not to mention Microsoft's great hope, is that 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".

In plain English, they're hoping that Skype will finally give Microsoft a real foothold in telecommunications - something that they've been pursuing for the last decade but that has thus far evaded them.

My money's betting that their desired foothold will remain elusive. From a consumer perspective, it'll be a nice additional feature to be able to use Skype in conjunction with Microsoft Outlook or with XBox, but how much will that ultimately transform the telecom landscape, really? What Microsoft needs in order to gain that ever-precious foothold is to finally develop a mobile operating system that seriously rivals Android and the iPhone. Acquiring Skype is not a realistic substitute for that.

Meanwhile, the rumors circulating last week about Skype potentially being acquired by either Facebook or Google appear to have been leaked in order to drive up the price Microsoft would have to pay. Either that or else the rumors were legitimate and Microsoft swooped in at the last minute fully doubling what the others were offering. In either case, the end result is that Microsoft may have overpaid by several billion dollars.

That's too bad. For the average consumer, Skype would have made the most sense being integrated with Facebook, whose IM feature - which has unbelievably heavy usage - could have gotten a major jolt in one fell swoop.

When it's all said and done, Microsoft has indeed bought itself a pretty great stand-alone asset - even if its revenues are somewhat lacking. The only problem is that acquiring Skype probably won't accomplish the main goal that Microsoft is acquiring it for.


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