“Microsoft press release follows, verbatim:
Microsoft Corp. (Nasdaq: “MSFT”) and Skype Global S.à r.l today announced that they have entered into a definitive agreement under which Microsoft will acquire Skype, the leading Internet communications company, for $8.5 billion in cash from the investor group led by Silver Lake. The agreement has been approved by the boards of directors of both Microsoft and Skype.
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. The combination will extend Skype’s world-class brand and the reach of its networked platform, while enhancing Microsoft’s existing portfolio of real-time communications products and services.
With 170 million connected users and over 207 billion minutes of voice and video conversations in 2010, Skype has been a pioneer in creating rich, meaningful connections among friends, families and business colleagues globally. Microsoft has a long-standing focus and investment in real-time communications across its various platforms, including Lync (which saw 30 percent revenue growth in Q3), Outlook, Messenger, Hotmail and Xbox LIVE.
Skype will support Microsoft devices like Xbox and Kinect, Windows Phone and a wide array of Windows devices, and Microsoft will connect Skype users with Lync, Outlook, Xbox Live and other communities. Microsoft 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,” said Microsoft CEO Steve Ballmer. “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.”
Skype will become a new business division within Microsoft, and Skype CEO Tony Bates will assume the title of president of the Microsoft Skype Division, reporting directly to Ballmer.
“Microsoft and Skype share the vision of bringing software innovation and products to our customers,” said Tony Bates. “Together, we will be able to accelerate Skype’s plans to extend our global community and introduce new ways for everyone to communicate and collaborate,” Bates said.
“Tony Bates has a great track record as a leader and will strengthen the Microsoft management team. I’m looking forward to Skype’s talented global workforce bringing its insights, ideas and experience to Microsoft,” Ballmer said.
Speaking on behalf of the investor group that sold Skype to Microsoft, Egon Durban, managing director of Silver Lake, said: “We are thrilled with Skype’s transformation during the period of our ownership and grateful for the extraordinary commitment of its management team and employees. We are excited about Skype’s long-term future with Microsoft, as it is poised to become one of the world’s most dynamic and comprehensive communications platforms.”
Founded in 2003, Skype was acquired by eBay in September 2005, and then acquired by an investment group led by Silver Lake in November 2009. Skype has made impressive progress over the past 18 months under Silver Lake’s leadership, increasing monthly calling minutes by 150 percent, developing new revenue streams and strategic partnerships, acquiring the intellectual property powering its peer-to-peer network, and recruiting an outstanding senior management team.
Other members of the selling investor group led by Silver Lake include eBay International AG, CPP Investment Board, Joltid Limited in partnership with Europlay Capital Advisors; and Andreessen Horowitz.
The acquisition is subject to regulatory approvals and other customary closing conditions. The parties hope to obtain all required regulatory clearances during the course of this calendar year.
Source: Microsoft
MacDailyNews Take: Everyone involved is so damn “thrilled,” but poor Skype just got Sidekicked.
Only two things left for us to do: Drag Skype app to Trash and hit Command-Shift-Delete. There, all done.
Get your head out of the sand. If MSFT cancels Skype for Mac and iOS, it will prevent people from switching. They will not want to give up communication with their friends and relatives.
This is the real reason for this purchase. MSFT is tired of bleeding users.
FaceTime is inadequate, even for Apple users as it only works on the latest machines, and does not work with iChat.
Apple had better integrate iChat and FaceTime for the entire user base, and for Windows, and do it FAST!
This is only smart thing Balmer has done in a long time.
I do not see a high barrier to entry in the internet telephone/video market. Apple has the pieces in place to surpass Skype. That’s another $8.5B of gee whiz acquisition that won’t provide any return on investment.
Apple has the pieces, but ONLY if they release a good client for Windows as well. There are far more people who Skype on Windows than voice/videochat on iPhones and iPads, so Apple’s insistence of keeping iChat and Facetime only on Macs and iOS means Skype has to be used 99% of the time in my family.
“iChat” has been on Windows for 8 years. It is called AOL Instant Messenger.
As I mentioned in another reply, no one I know–friends, family, coworkers–uses AOL IM. Skype became the de facto video chat program for all of us.
I also think that one of the big deals in the linked article is the mention of 124 million subscribers, with a peak concurrent usage of 23 million.
What happens when Microsoft decides to put a Bing search ticker/ad bar on your “free” Skype chat window (including full screen views). Yeah, Microsoft is not above doing this. They just boosted their search and ad revenue immensely because people will just take it in stride because they still want a free service. Microsoft is trying to buy its way into the search/ad game that Google has, for all intents and purposes, owned for the last half-decade.
At “Business Insider” they are saying how M$ just beat FaceTime as WP7 instantly gets 600M subscribers. However, not many WP7 phones have been sold, that’s one little tidbit they failed to mention. http://finance.yahoo.com/news/Sorry-FaceTime-Windows-Phone-siliconalley-2916921070.html?x=0&.v=1
If Apple has been successful in marketing Facetime as a premium iPhone 4 feature, this could ironically come back to bite them. If portable videochat becomes a must-have feature (which personally I don’t see happening, but I’m no tech oracle), people will see a WP7-optimized Skype available on non-Apple devices, which might be cheaper (for some, just being a non-Apple device is enough to sell them on it), and may even be allowed over cell networks, which Apple doesn’t currently allow.
Apple DOES allow Facetime over cell networks… it’s up to cellular services to allow it. Microsoft will face the same situ.
I don’t see you vision of how Microsoft’s implementation will be cheaper.. Facetime is free on the iPhone.
Regarding the silly retards who dislike Apple products because they’re made by Apple.. that’s retarded and making them miss out on the best hardware available on the market.
I meant cheaper handsets and possibly service plans, not Facetime itself.
There are legitimate reasons why some people are anti-Apple, just as most of us here are anti-Microsoft and increasingly anti-Google. I’ll argue points and correct misconceptions, but bottom line it’s their money and their choice if they go with a different product.
Since Skype has never really made money as a program that works on a number of platforms, Ballmer must be thinking that if he makes Skype an exclusively Windows/Windows Phone program, then the money will start rolling in. But how do you recover an $8.5 billion investment?
On a related note, with Skype now under Microsoft’s wing, here is the path for destruction of Skype on the Mac.
1. A useless, counterintuitive ribbon will be introduced for Skype that takes up the top quarter of your screen.
2. Mac updates to Skype will start to fall a year behind Windows updates.
3. Security holes will start opening in Skype far faster than they do already.
4. Apple will integrate and improve iChat/Facetime when Lion is released and make it cross platform, e.g., iTunes and Safari.
Adios Skype, we had a nice time together.
I hope your forward looking statements in #4 are correct. That would be great!
Apple’s version of video chat (Facetime) needs to have either feature parity or more features than Skype. The quality of the audio and video needs to be top of class. And a Windows version also seems imperative at the moment.
Ok apple…. Time to Put up or shut up.
Facetime is great, BUT …. its Apple only. that’s one reason it is not catching on like Skype did.
FaceTime for Windows client.
add up to 4 people at a time. (or more, probably only on the desktop)
Everyone in my family uses Skype. I have an account but never turn the thing on. HUGE battery drain on iPhone anyway.. Facetime just “works” on iOS.
It’s become a general term, not a “Brand” now.
I said it in the other Rumor thread. 2 people at work have iPhone 4’s, they were glad Apple put a “Skype Camera” on the iPhone 4……
When people see the camera, or think of Video chat… they DO NOT think FaceTime… they only think Skype.
MS was SMART in one aspect of this, Buy the only competition out there. sure there are other Video chat software out there, but without looking them up… name 1 (outside Facetime)
most people are going to struggle with naming one.
MS probably wanted to create some MS video chat to compete with Skype. They probably sat down and figured it was cheaper to just buy Skype, rename it… and be #1 as soon as the paperwork was signed.
Apple should have bought Skype last year when the rumor was circulating, and had the next version of Skype (rename it FaceTime for Windows) work with FaceTime, and kill the Mac client.
Now MS can do this very thing. Buy Skype, integrate xbox and windows phones. Kill the Mac client, say there are many problems with developing it for Mac. Which the latest client does have issues.. Or just never update the mac client.
And MS wins…Only thing Apple can do, is a FaceTime for windows Client and hope for 2nd best.
I wouldn’t underestimate the cards Apple has with iPad, iPhone and the best desktop/notebook computers available on the market via hardware, OS X and iOS. Apple has an AMAZING software development team, and I’m sure Apple will use their talent to the fullest to tackle this chat dilemma.
Dont get me wrong, its NOT the mac side…
It’s the windows side that Apple is neglecting thats going to hurt them.
Ms just has to market the fact that every PC has Skype built in to the OS now. the client will be gone, there will be a Windows update with Skype added as a required update eventually. Every PC will have Skype, Skype already has a huge user base.
To Compete, Apple now has to make a FaceTime for windows client. once again, it’s MS vs Apple instead of FaceTime Vs Skype.
Quality, Apple wins. Quantity.. MS wins.
Or make Facetime compatible with Skype. I believe Skype was already thinking about it since Apple wanted to make Facetime a standard.
Anyway I find it stupid that Facetime users could not call Skype users and vice versa. That’s the way it should work. Really, if I use an iPhone I can call any phone in the work irrespective to their brands…
Different protocols, and different user accounts. Not an insurmountable technical problem, but a business one–both sides must agree to integrate the technologies to make it happen.
Phone networks are like snail mail–both came from an earlier time, and both still cost a token amount per transmission. Since Facetime and Skype are both free between users, they need a viable business reason to integrate each others’ technologies.
Sorry for SKYPE to come in to the wrong hands.
Skype deleted. I neer really used it anyway. Sorry Microsoft, but you just flushed 8.5 million down the toilet.
Jay, it’s even worse than you think.
Microsoft spent 8.5 Billion on Skype.
Not 8.5 Million.
8.5 Billion.
If this was a mistake, it was a very, very expensive one.
They flushed it because you deleted an app that you don’t use? Get a life, man… just because you don’t use it, doesn’t mean other don’t. Do you have ANY idea how huge Skype is in China? 1.3 billion and counting, my friend.
Actually – anyone who uses iChat uses AOL – Apple uses the AOL servers and protocols for iChat. Which is why you can sign in with your Apple ID or with an AIM or AOL account. Of course you can also use G-chat/Google as a Jabber in iChat.
Maybe mister softy can take Mobile Me off our hands. What a waste of my money to have paid for that piece of crap! I can only imagine how the fanboys would howl about Mobile Me if MSFT had brought it out and it had been so useless! But hardly a word from the fanboys. Why is that, kool-aid drinkers? I agree with FTB, AAPL needs to replace Skype with something better. Face Time isn’t the answer.
Yep, there goes Skype, time for a change.
Besides, when left running, Skype drains my iPhone’s battery like crazy. Do not expect improvements now when M$ took it over. They will probably add some more crap that will cause iPhone to malfunction just so they can blame this on Apple.
Oh well.
I tried using iChat (or FaceTime – I really don’t know what it was called) on my Mac when it first came out. It was fiddly and not intuitive and I gave up on it and never used it again.
We put Skype on our system at home, and managed to get it to work a few times but haven’t used it again in over half a year, so that tells me Skype is not the answer for us.
So, in this house, both Apple’s video chat solution, and Skype, are not nearly at the stage of replacing email or the telephone.
If there’s a large market of people waiting to pounce on an improved video chat application, this might be the next, big, money-making opportunity, waiting to be plucked by either Microsoft or Apple.
But is this a must-have, game changing application, worth more than 8.5 billion in development?
Even if video chat was easy and convenient, I really don’t see myself preferring to use it in place of email, or the phone.
But I’m a Focus Group of One.
Another nail for MS….
I had a Skype account about a year ago and they overcharged me for a special sign up offer. I tried everything I could think of to get ahold of them, but couldn’t get a single response from anyone. I had to have my CC company cancel the transaction, and still nothing from Skype. Terrible. Like MS, focus all of your energy on telling me how great your product/service is or will be, then under deliver. Good luck to both of them.
Ballmer grandstanded the Skype buy-in with the BoD so he could try to save his ass by guaranteeing to the Board another ‘great expansion’ of the MS brand, “just like the Nokia deal”.
12 months max. Ballmer is out.
” Microsoft will continue to invest in and support Skype clients on non-Microsoft platforms.”
Yea, with crippled half featured bullshit SW laced with hooks into other MS technologies like Silverlight, WMA/WMV, etc.
Nice payday for Skype investors- not so much for a bunch of Skype employees who will have their jobs moved to Costa Rica.
This is sad–Skype is not as good as iChat/Facetime, but has its utility: I like having Skype on iPhone for 3G video chats when wifi either isn’t available or the network blocks video chat. Are there any good, free alternatives to Skype for 3g iPhone video chat?
Too bad. I have enjoyed Skype. Today begins the countdown to it’s certain death and burial.
One thing nobody ahs mentioned is that Skype chat is encrypted by default. Other IM type chats don’t encrypt securely and keep logs from what I remember. I bet now that MS has it’s tenticles in Skype the encryption may go bye-bye.
*sigh* This is depressing.
Unfortunately I am still on a PPC G5 (and have no iOS devices.. yet) and I fear that I am gonna lose Skype services entirely.
Bye Skype! It was nice knowing ya… but I fear it is gonna go the way of Hotmail and just plain turn-to-suckiness.
So much for Skype. Tossed into my Trash. Sad to see you go. On to another technology…
eBay bought Skype for 2.5 billion and they were so damn proud of themselves until they found out, the deal did not include the telephony patents! Burned, but good.
It seems the original Skype partners wwere going to keep the patents to themselves for a future business venture.
Are we to believe that Microsft paid four-times the amount eBay paid and they still didn’t take possession of the telephony patents?
Trashing Skype is premature since it is not M$ junk.
Updates and upgrades will be, but since it is working quite smoothly I will skip those and still use the pre-M$ version