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Microsoft buys Skype for $8.5bn

Paddy Baker 10 May 2011
Microsoft buys Skype for $8.5bn

IT giant Microsoft has bought the voice-and-video-over-IP provider Skype for $8.5 billion in cash. The deal is subject to regulatory approval.

"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," said the company in a statement.

The most significant part of this announcement for the professional AV industry is the mention of Lync, Microsoft’s unified communications solution. Skype can be used to strengthen Lync, with the potential to take on major corporate telepresence players such as Cisco/Tandberg and Polycom.

In the tablet market, Microsoft could use Skype to rival Apple’s Facetime video-calling application, which has been a key selling point for the iPad and later models of iPhone and iPod touch.

Some analysts expressed surprise at the price of the transaction. ABI Research described it as "a lot of money for a firm whose business has yet to become profitable". Eighteen months ago, previous owner eBay sold 70% of the company to investors for $2bn.

"Microsoft will continue to invest in and support Skype clients on non-Microsoft platforms," the company added – apparently a reference to mobile phones. Microsoft’s mobile business received a boost in February when Nokia announced that it was dropping its Symbian operating system in favour of Windows Phone.

Skype CEO Tony Bates will head Microsoft’s new Skype division, reporting directly to Microsoft CEO Steve Ballmer.

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