It's Official - Microsoft to Acquire Skype for $8.5 Billion


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Microsoft announced Tuesday that it will acquire VoIP service Skype for $8.5 billion in cash.

Microsoft will purchase the company from investor group Silver Lake, which—along with Index Ventures, Andreessen Horowitz Ventures, and the Canada Pension Plan (CPP)—acquired a majority stake in Skype in December 2009.

Microsoft said the deal will increase the accessibility of real-time video and voice communications across its products, while expanding Skype's reach. Skype will be available on Microsoft products like Xbox, Kinect, and Windows Phone, and Microsoft will connect Skype users with Lync, Outlook, Xbox Live, and more.

Microsoft said it will continue to invest in and support Skype clients on non-Microsoft platforms.

Skype is a phenomenal service that is loved by millions of people around the world, Microsoft CEO Steve Ballmer said in a statement. Together we will create the future of real-time communications so people can easily stay connected to family, friends, clients and colleagues anywhere in the world

When the deal is complete, Skype will be a new business division within Microsoft. Skype CEO Tony Bates will become president of the Microsoft Skype division, reporting to Ballmer.

I believe this acquisition is the very best way to extend Skype's reach and will allow us to bring real-time video and voice communications to more people around the world than ever before, Bates said in a blog post. ;The combination of Skype and Microsoft will directly benefit all of you who use Skype by ushering in a new era of generative ways for everyone to communicate;

Egon Durban, managing director of Silver Lake, said the group is ;thrilled with Skype's transformation during the period of our ownership

EBay purchased Skype in September 2005 for approximately $2.6 billion, a deal that was completed a month later. The e-commerce site, however, never really managed to maximize its investment in Skype. In April 2009, eBay said it would separate itself from Skype via an initial public offering of Skype shares in 2010. EBay later shrugged off speculation that that IPO was in danger due to Skype's licensing dispute with Swedish company Joltid.

Both companies are holding a press conference at 11am Eastern, so stay tuned for more details.


Microsoft Buys Skype For $8.5 Billion (VIDEO)

More Info: Microsoft to buy Skype for pricey $8.5 billion - Yahoo! News

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Deal with Microsoft to boost Skype

Microsoft’s blockbuster purchase of Skype will put the free-calling service before vastly more computer users, boosting a technology that already worries traditional phone giants.

Company analysts portrayed Tuesday’s merger — Microsoft’s biggest ever — as a way for the slow-footed firm to catch up to Apple and Google as consumers and businesses begin to move away from staid desktop computers to tablets and smartphones that largely do not run Windows software.

The marriage of the companies combines a whimsical Web darling founded by European engineers with a granddaddy of high-tech. Skype chief executive Tony Bates will continue to lead Skype as a separate Microsoft division and report directly to Ballmer, Microsoft said.

It will be Skype’s fourth owner in its nine-year history, which includes an acquisition by eBay in 2005 and a private-equity investment in 2009 by Netscape founder Marc Andreessen, Silver Lake and the Canadian Pension Plan Investment Board. It’s also tried two times to go public, and analysts estimate it would have a stock valuation of about $1 billion.

But Ballmer said he expects Skype will add to Microsoft profits in the first year and that regulators will approve the deal by the end of 2011.

The acquisition doesn’t solve all of Microsoft’s problems. But it immediately makes it a well-known name brand in videoconferencing. Ballmer noted that Skype has come to personify the service it provides.

“Skype is a verb,” he said.

The merger comes at a crucial time for the maker of the Windows operating system. For the past decade, Microsoft’s star has been fading.

It bought Hotmail in 1998 for $100 million, and that business fizzled. The firm’s Zune MP3 player never made a dent in the dominance of Apple’s iPod. Its Bing search engine has slightly improved its market share in recent months but is still far behind Google in market share. And most troubling to observers, the company that transformed the PC has been stuck on the sidelines of the critical mobile phone market while Apple’s iPhone and Google’s Android platforms have taken off.

MORE Microsoft-Skype deal likely to boost the online free-calling service - The Washington Post


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Re: Deal with Microsoft to boost Skype

Microsoft Acquires Skype for Record-breaking $8.5B

Earlier this week Microsoft announced plans to buy up popular Voice over Internet Protocol (VoIP) service, Skype. The Redmond-based software giant agreed to pay $8.5 billion in the deal, which will bring all 170 million of Skype's users under Microsoft control.

The deal marks the biggest acquisition in Microsoft's history. (Source:

"Skype is a phenomenal service that is loved by millions of people around the world," Microsoft CEO Steve Ballmer said in a recent statement.

"Together we will create the future of real-time communications so people can easily stay connected to family, friends, clients and colleagues anywhere in the world." (Source: - Official Home Page)

Changes to Skype Likely Negligible
Experts say that changes to the Skype platform and user interface likely won't happen -- at least not in the short term.

"Skype's value decreases if Microsoft starts to muck around with it," noted technology analyst, Om Malik.

What is likely to change are Microsoft Outlook, Messenger, Hotmail, and Xbox Live, as these services would greatly benefit from an integration with the new VoIP platform. Some rumors suggest that new functionality could include video chats running concurrently with Xbox Live gaming sessions or integrated Outlook email and Skype contact lists. (Source: News articles and headlines from the Chicago Sun-Times)

For now, though, most Skype users won't notice much difference at all. "[The sale] doesn't impact the consumer very much," Malik said.

Skype Monetization Strategy Unclear
PC Mag editor Lance Ulanoff also thinks it's unlikely Microsoft will change much about Skype.

Ulanoff says it's especially unlikely that users will soon be encountered by new subscription or pay-as-you go schemes, either. "With Skype, you get this built-in well of consumers and businesses too," Ulanoff said.

"So the great thing about Skype being a part of Microsoft is it doesn't necessarily have to worry in the short-term about turning a profit. It's part of a big company that can use its capital and slowly but surely find ways to monetize it."

Source: Microsoft Acquires Skype for Record-breaking .5B /

they probably will name it something like "Microsoft Video Phone"

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