Microsoft bought Skype for $8.5 billion. To put this in perspective, this is 5x what Google paid for YouTube. Many industry analysts believe that Microsoft overpaid for the VoIP giant, especially since Skype was sold in 2009 for just $2.75 billion. Given the huge jump in price there was likely an unannounced bidding war.
With Microsoft overpaying for a company that does not rake in huge revenues, the question is, what are they going to do with it?
Industry experts are already speculating on what Microsoft is going to do with Skype. Many experts, including Magnus Rehle of the Greenwich Consulting firm, believe that this was a to purchase a large block of customers and to buy a brand but this explanation seems to simplified given that buying customers doesn’t seem likely from the world’s largest software firm.
The smart money is on Microsoft simply wanting to break into a new market. Microsoft has the corporate market cornered but lacks any products with real pizazz that appeal to consumers, and it has lacked a sensational product line for some time. And with Apple coming out with super sexy and sleek products, Microsoft is beginning to look like the PC in the Mac commercials.
“We see a lot of fit between the Microsoft strategy to increase consumer focus and Skype. If this is integrated in the right way, it has a lot of potential to leverage platforms like Xbox and Windows Phone to new heights,” says Leif-Olof Wallin, VP of Research at Gartner.
Microsoft is also currently missing out on the huge VoIP market?a market with increasing importance, especially within Microsoft’s bread and butter sector – corporate. “The takeover of Skype allows Microsoft to integrate new services into its product range. Namely, to make aggressive inroads into the mobile market,” says Eldar Murtazin of the Mobile Research Group.
There seems to be a trefoil growing with Microsoft, Nokia and Skype; meaning we might very well see a Skype phone on the market soon, and of course it would use a Microsoft operating system (a sector they have been lagging in behind the iPhone and the Android operating systems).
Rehle believes that there is a high likelihood that it “could (also) be a defensive strategy from them… to block Facebook and Google from doing it instead.”
It will be interesting to see how this plays out, but know that Microsoft didn’t spend $8.5 billion for 170 million customers, most of whom are probably Microsoft customers anyway.