Microsoft + Skype = $8.5 billion thrown into a bonfire

“After paying $8.5bn for Skype, what will Microsoft end up with? In a few years, I forecast it will be this: $8.5bn less in its bank accounts, a cats-in-a-bag fight between its Office division and its Online Services division over integration of the service, little – if any – kudos from consumers, and no appreciable effect on its bottom line,” Charles Arthur reports for The Guardian.

“That’s right: Steve Ballmer, Microsoft’s chief executive, might as well have put the money on a bonfire for all it’s going to do for the company’s share price, which has barely shifted in his 11-year tenure,” Arthur reports. “In fact at present, the share price reckons that Microsoft is less valuable as a single entity than if it were broken up.”

Arthur reports, “The trouble is that Skype is one of those great internet ideas that can’t be integrated into as many places as you might think. That’s partly because it uses its own protocols for the voice-over-internet system (which means it can’t be integrated into other VoIP services). But it’s also because even while all of our analogue conversations are being digitised, the phone system is one of those technologies so deeply embedded in our culture that you can’t get it out. When I called Skype’s people for comment on the talk of acquisition, it was a mobile phone number, not a Skype handle, that I looked for.”

Read more in the full article here.

Related article:
Microsoft buys Skype for $8.5 billion; company’s largest-ever acquisition – May 10, 2011


    1. Or more recently, “Kin” (aka Danger’s Sidekick). Or Connectix (Virtual PC). I’m sure there are many examples of Microsoft acquisitions that go nowhere fast.

  1. Whether Microsoft makes any money on the deal or not, this could be the end of Skype as we know it. Microsoft is even more unscrupulous than Facebook, but not as smart.

    1. While I personally know of no-one who’s ever paid anything to use Skype, I’m sure there are those who do. But, be sure (which is why I’m getting rid of Skype, a la MDN recommendation) that free Skype will be a thing of the past rather soon….

      1. On the contrary I know tons of people (myself included) who pay to use Skype to make international calls. It is an excellent cheap service. I use both Google Talk and Skype.

  2. now take a minute and remember how well the Danger acquisition was, mS managed to create the Kin and Kin II, and they sold in the hundreds!
    Now we wait for MS to come out and say how they are willing to go the long haul on Skype ( ie lose money) in order to build, errr, something.
    My mr ballmer stay as long as it takes….

  3. This reminds me when Microsoft acquired Conectrix, the virtual pc and virtual ram for Mac.
    Once they acquire that company, virtual ram disappeared and virtual pc had to became free because apple changed from PPC to intel.
    Today, I don’t use skype for my iPhone, I use “Viber”, works a lot better than skype and face time works also better for video conferencing. So what’s the point of Microsoft buying skype? Another useless mad vision from a mad person?

    1. Virtual PC died on the Mac, but MS did turn it into HyperV on Windows and integrated it beautifully into Windows 2008 Server and Windows 7. Its a wicked piece of tech on Win7, you can even set the Win7 boot loader to boot a virtual machine natively at startup.

      I’m hoping they can do well with Skype, but I have my doubts. Hotmail keeps coming to mind and they completely destroyed that product!

  4. Best comment on the Baldmer take over of Skype:
    Today, Microsoft buys Skype. Costs $8Bn.
    Tomorrow, Apple makes Facetime open source. Cost to all vendors $0.00.
    The look on Balmer’s face: Priceless.

    1. FaceTime isn’t open source, it’s protocol is. This means, any vendor can write their own FaceTime style app, or integrate the protocol into a current app. Can’t wait for this to start happening!

  5. The Bonfire of Vanities originally authored by Tom Wolfe now in its second edition guided by the editorial skills of Steve Ballmer. Way to go Baldy, let’s make a bonfire a mile high with those Benjamins.

    1. …to be followed by “Windows Phone 7 Visage Vision Live Enabler Professional Edition” and “Windows Phone 7 Visage Vision Live Enabler Basic” and “Windows Phone 7 Visage Vision Live Enabler Deluxe Enterprise Edition”.

      1. You forgot 2

        “Windows Phone 7 Visage Vision Live Enabler Home Premium Edition”

        and the one everybody will want:

        “Windows Phone 7 Visage Vision Live Enabler Ultimate Edition”

  6. How long before Skype’s Mac support gets EVEN SUCKIER?

    Do, I smell iView Media Pro all over again…
    Well, maybe not THAT bad. But M¢ did a fine job killing it.

  7. I can only guess they want to connect the living room through xbox with iOS and everything else. Say what you want about Microsoft and I’ll agree, but the one place they are doing things right is xbox live. It’s a hit and the competition doesn’t come close. When they put skype on xbox live they will bring the entire world into the living room for calls and video calls.
    Maybe not worth 8billion but that is the best thing I can see them doing with this.

    1. @MSav:

      This January at CES2011 MS stated it had shipped a cumulative 50 million X-Boxes; Apple has sold over 108 million iPhones.

      People carry their iPhones with them everywhere, and the X-Box stays in the living room.

      What do you think is going to be the better platform for connecting people?

  8. This is what we need m$ to do. Spend large amounts of its cash on companies anddonothing useful with them.
    My bet is that m$ will incorporate it into thier windows phones for nokia as a FaceTime competitor. It willbe crap and cost lots of money to implement.
    I hope that$ continue to do this since eventually they will start to lose money as their os and office monopoly diminish.

    1. That CNBC link was spot on. That was my reaction as soon as I heard the deal was confirmed.

      When this purchase goes nowhere, I feel Balmer will be out of MS.

      This is his last Hurrah!

      Even MS will have had enough!

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