Software juggernaut Microsoft has announced they will acquire VoIP provider Skype, but promises to continue offering Skype for competing platforms. The $8.5 billion deal is expected to close by year-end.
Microsoft will integrate Skype's calling features into many of its key products, including Office, the Xbox and Windows Phone software, CEO Steve Ballmer said Tuesday. This is good news for users of these products, especially running on the Windows 7 platform, as Microsoft's products are at their seamless best when working inter-alia. That said, homogenous systems--whether at desktop level or enterprise level--are more easily compromised than heterogeneous ones.
Microsoft had little choice in supporting competing platforms, as many Skype customers use it on Macs, iPhones/iPads and Android products. Cutting off part of your userbase is not the sort of business strategy that's made Microsoft one of the world's more prominent technology companies.
Skype had $860 million in revenue last year and is "a strong and growing business," said Microsoft CFO Peter Klein. He added that its revenue is growing by 20% a year with earnings growing at 40% a year.
Skype recently started running full-page ads at the start of video conference calls, and Ballmer envisages new advertising opportunities. "We think advertising is a very power monetization scheme for us," said Skype CEO Tony Bates, who joined Ballmer on stage during Tuesday's announcement.
What will this mean for Skype users? For those on W7, tighter integration with Microsoft's other products, likely with enhanced performance. For users on other platforms, not much. Skype will continue to work, although as elsewhere on the Net, expect more advertising.
This is the biggest acquisition since Intel bought McAfee, and indicates the ongoing trend: large vendors gobble up medium-sized vendors and create a more diverse ecosystem--internally. Media coverage of this acquisition has also shown how critical technology has become to the world of mainstream business.
"We want to stitch together the world," said Ballmer.