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Should Microsoft purchase Skype for $7 billion? How would you like to see them integrate Skype?
It was recently announced that Microsoft might strike a deal to purchase Skype for 7 billion dollars. Is this a smart move? How would you like to see Microsoft integrate Skype?
Also, I thought this was an interesting quote:
"Microsoft will likely need to tread carefully, though, in integrating Skype into its mobile software because of the potential for pushback from wireless carriers, whose support Microsoft badly needs."
Thoughts?
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7 Answers
From Microsoft POV, this acquisition hits multiple strategies:
- Cloud: Microsoft is working to be "all in" with the cloud. Skype is a huge cloud app with 30 mil concurrent users (that's a big number) and +600 million users around the world. Integrating Skype with Office 365 is very powerful.
- Lync: Lync is Microsoft's PBX killer for business, and although very different technically, offers many of the same features as Skype. No enterprise class phone solution integrates with Skype. Could give Lync a big boost.
- Xbox: Microsoft is tying Lync to xbox so living room users can video chat with the office. But Skype also has a living room strategy. With Xbox, Lync, and Skype - Microsoft would have a comprehensive living room strategy for both home based employees and consumers. This is a space Cisco and Polycom are also hitting.
- Windows Phone: Skype works on every mobile carrier on every smart phone. Microsoft could tightly integrate Skype directly into Windows Phone 8.
- Microsoft Everywhere. Skype is global and skype is multi-platform. It puts Microsoft on Macs, iPhones, and iPads, Linux, and more.
From Skype Point of view, $7B is a pretty good valuation. Far better than they would do with IPO. Skype is up to nearly 1000 employees and MS can probably offer some big savings there. Creates a nice exit for many of Skype executives.
This deal has interesting implications...
It's a much better fit for Microsoft than it was for eBay -- by far. Also, I think that Microsoft has the ability to position Skype such that they can still work with the various carriers rather than against them.
But the carriers need Microsoft too... I'm sure they can work something out.
I very much agree with Dave Michels' assessment
Plus, this gives Microsoft something to compete with Google Voice, which they really need if they don't want this market to run away from them. It's good to have business (both individual and organization) and consumer side covered.
If I was a shareholder I'd want to know how Microsoft proposed to recoup their investment and then make profits from it.
The list of Internet acquisitions that have failed to show monetary benefits to shareholders is huge (think Youtube for Google for example) and while MS is certainly cash rich - acquistions for acquisitions sake might not be the best approach in the long run.
Skype was not the best acquisition eBay made. However, this time around, it was a pretty hot commodity - Cisco, Google, and Facebook were also very interested, which is why Microsoft had to overpay a bit. Regardless of the price, this is not a pool of companies that is known to be unwise.
The actual deal size is $8.5 billion, since Skype has $1.5 billion in debt (ouch). And with Microsoft throwing off $2+ billion a month in cash profit and having $48 billion in cash on hand, if the deal is a complete failure, they're out 5 months of profit for 1 year, or are down to "just" $39.5 billion in cash on hand. That is not a huge risk.
But I don't think this deal will be a failure. When you look at Windows Phone being the new OS for all Nokia phones, I'm betting Microsoft has some solid plans on how they can monetize this acquisition and integrate it effectively.
The Invisible Hand by Adam Smith: http://answers.google.com/answers/threadview/id/38668.html
So unless someone else can pay more, I think they should go ahead purchase it and replace all their unified communication technology with Skype p2p, introduce hardware, apply it to space and high tech applications of long-reach signal transmissions, and invest in philanthropic uses for out-of-reach places. Also... kill the the stalemating lync product (please!).
The acquisition of Skype by Microsoft could help push Microsoft into the lead as a UC player.
Currently there is some very hot competition from the likes of Cisco, and from Google, to lead the way as a truly unified cloud communication solution.
By taking the infrastructure and know-how of Skype and pushing this into the business sector (something that Skype have been struggling to do for a long time), Microsoft have the potential to push themselves ahead as the leader in the UC race with Lync and a business grade VoIP solution .
I would like to see Skype integrated into the Office Communications Online portion of the BPOS suite similar to Google Apps.
For anyone who has not tried Microsoft's BPOS cloud solution, now would be a great time.
http://www.microsoft.com/online/business-productivity.aspx
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