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Microsoft buys Skype for $8.5 billion; creates new business division

Time: 08:58 EST/13:58 GMT | News Source: ZDNet | Posted By: Robert Stein

The rumors were right. Microsoft announced on May 10 that it bought Skype, an Internet communications vendor, for $8.5 billion. Instead of trying to mash Skype into an existing Microsoft business division, the company has decided to create a new, separate Skype business division, with Skype CEO Tony Bates as the newly minted President. Bates will report directly to Microsoft CEO Steve Ballmer. In its press release announcing the deal, Microsoft played up the potential synergies between Skype and its own communications offerings, including its Lync VOIP platform, Outlook mail, Messenger instant-messaging, Hotmail Web mail and Xbox Live gaming service

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#1 By 15406 (209.87.228.158) at 5/10/2011 10:23:35 AM

Skype's ubiquity is part of its success. Is MS going to pull an MS and try to tie it to Windows and kneecap implementations for other platforms?

#2 By 23603 (206.162.181.106) at 5/10/2011 12:09:26 PM

Internally source told me that Microsoft will leave Skype as a brand name...

But you knows what Microsoft will do in the future......

#3 By 2960 (72.205.26.164) at 5/10/2011 12:40:52 PM

This will probably be a Buy & Shelve. This product makes no sense for Microsoft other than it may be a nuisance to them, and it's the best way to get rid of it.

#4 By 15406 (209.87.228.158) at 5/10/2011 2:23:34 PM

#3: I can't see MS paying $8B only to put it on a shelf. MS being MS, they will try to tie it to Windows, and/or somehow monetize it -- preferably both. MS has been trying hard in various forms over the past decade to be a middleman or gatekeeper, charging money for doing almost nothing. There are already a couple of Skype competitors, and all they're waiting for is for MS to eff everything up and lose a bunch of users to the new services. Not long ago, everyone was on MySpace. If MS isn't careful, they will be stuck with an $8B hole in their pocket.

#5 By 7754 (74.94.83.33) at 5/10/2011 2:59:10 PM

#3, 4--it makes sense federated with Lync, but to the tune of $8B? I think if you look at the $8B more as preventing competitors from taking over a market Microsoft wants to be in rather than the value of Skype itself, then it makes sense. But only if, like Latch says, if they don't "eff everything up."

#6 By 9589 (76.6.121.211) at 5/10/2011 9:52:10 PM

Its a great product to monetize much like Internet Search, Facebook, Twitter, etc. before it. Of course, Microsoft's critics that post here were silent while the above were monetized. Will see what you all say as this unfolds.

Competitors are holding their breath hoping that Microsoft somehow screws this up. If Microsoft make a success of it, they will be whining and crying that Microsoft is an "evil monopolists."

Of course, the so-called European Union will get right on that - if they exist by then - given the crater that decades of socialism is making of the their economies.

If it works out, it could add billions in revenues and profits like so many of their initiatives have over the years. Whether that lifts their moribund stock price, only time will tell . . . .

#7 By 15406 (209.87.228.158) at 5/11/2011 8:32:59 AM

#6: Monetization in itself is not necessarily a bad thing; it's all in how it's done.

If Microsoft make a success of it, they will be whining and crying that Microsoft is an "evil monopolists."

Oh please. The only time people yell 'evil monopolist' at MS is when they're acting like evil monopolists. If MS wants to make a go of Skype and try to make some money from it then that's great. If they're really using it as a means to an end of further thwarting competition, then that's not so great. Keep it moving forward the way it is now without little MS tricks & games like somehow making it work less well on anything but Windows, or playing the bogus patent game where suddenly any FOSS Skype client is somehow infringing on Microsoft's precious IP. If this happens then you'll hear the yelling, but you won't care because you'll be too busy coming up with excuses as to why it's perfectly ok for MS to do whatever it feels like.

#8 By 2960 (72.205.26.164) at 5/11/2011 8:37:26 AM

I see it as basically an 8b$ 'Hit' on Skype to get rid of a nuisance. Consumers will pay for it one way or another, no sweat off Microsoft's back.

#9 By 28801 (65.90.202.10) at 5/11/2011 8:46:39 AM

MS will probably integrate this with XBOX to leverage the KINECT camera.

#10 By 143 (216.205.223.146) at 5/11/2011 10:35:21 PM

That's the sound of money being flushed down the drain people keep hearing.

#11 By 532435 (74.219.160.9) at 5/12/2011 7:25:50 AM

Get ready for MS suing anyone and everyone now because they didn't license their "IP" and anything having to do with VOIP or internet calls / video calls..

If it looks and works like Skype, then it must be MS's IP, so we're gonna sue you for licensing..

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