Microsoft Buys Skype and History Paints the Tea Leaves

Microsoft purchased Skype today for 8.5 Billion. This is a sort of odd couple, the widowed queen suiting the jester. Microsoft, the once mighty giant who has struggled in the latest digital revolution and Skype, a juggernaut of intellectual property who never quite made any money.

Microsoft has had enterprise internal communications for a while, including their Lync product. They’ve wanted a way to stay relevant in the new digital economy which trades information as currency. The value of Google (and eventually Bing) is the control of information. Since everyone goes to Google to search, placing ads in their site has more value than say This value is enhanced through the analytics suite provided to advertisers which provides detailed interpreted data to advertising campaign managers. By purchasing Skype, Microsoft seeks to gain a foothold in this information economy by bringing Skype endpoint technology to all of their appliances (think videoconferencing from your Xbox).

Skype had their earlier adventures with eBay. After being purchased for just a bit over 2.5 billion, after many years, eBay sold Skype in 2009 to a private equity firm. eBay was never able to find a use for Skype’s technology, partially due to a seriously bad purchase agreement which limited their ability to use Skype’s Intellectual Property. Skype has always had a tactical advantage in the market place because of their affordable, but excellent, Estonia-based engineering corp.

There is some real room for Disruptive products in the Video Conferencing space. To create a world where every device can be linked via video would alter the way we do things. How would your world be different if you could hold a video conference from anywhere, with any appliance? I think the truth is that some of us would rather not be seen all the time, and like the convenience of smartphones, there are those of us who can live without. With that being said, there is a tremendous opportunity to explode this space.

I have a generally positive outlook on Microsoft’s purchase. Getting access to Skype’s 170 Million users who use the service over 100 Minutes each month is a big win for Microsoft. There’s a lot of information there, but harnessing it will be key. I would expect to start seeing Microsoft applying Skype’s technology to their products in about nine (9) months. If Microsoft can apply Skype’s powerhouse technology to it’s huge enterprise customer base, I don’t think very many people will be laughing much longer.

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