Microsoft to acquire Skype

http://www.microsoft.com/Presspass/press/2011/may11/05-10CorpNewsPR.mspx

by ukdm • 15 years ago

174 85 15 years ago

microsoft.com

090178• 15 years ago

The official announcement. I wonder how interoperability between various VOIP solutions will turn out with MS on board.

I am one of these dreamer of a multiprotocol VOIP solution. Like emails actually.

hvs• 15 years ago

Or telephones.

martinkallstrom• 15 years ago

In my eyes this is Facebook's missed opportunity. Facebook is a sufficiently powerful brand to be able to negotiate exclusive deals with operators around the world to launch a VOIP phone relying on flat rate data only, replacing the address book with a subset of your social graph and SMS with Facebook Messaging. Such a move could have been very disruptive towards voice phone operators if paired with 170M desktop clients and the Skype protocol.

It's a strategy Facebook could adopt without Skype, but with the two brands in unison they could rule the market. I don't see Microsoft being able to do the same.

portman• 15 years ago

Can anyone shed light on this statistic from the press release:

"With 170 million connected users..."

Every article on Skype for the last 3 months has mentioned "600 million accounts". (http://www.google.com/search?q=skype+600+million+accounts) But I can't find an original source for that number; it seems everyone is quoting "industry estimates".

Were the estimates on Skype's userbase wildly wrong, or is a "connected account" somehow different?

JacobAldridge• 15 years ago

It's a really good question - I made the note elsewhere [1] that I was really surprised at 663 million users, because that would make Skype more popular than Facebook (by measurements of popularity that don't include swearing the calls that start glitching ten minutes in).

170 million I can believe more readily. It could just be the difference between users and registered accounts (I know several people who've set up Skype 4-5 times over the years, using it rarely and then creating a new account on a new machine when they need to use it again).

[1] http://news.ycombinator.com/item?id=2531626

nikcub6• 15 years ago

Facebook has 650M active users. They always measure and cite active users, to their credit they do not fudge around with the numbers in their PR

Skype is 170M active (quarterly, Facebook is monthly), and 680M total registered.

A lot more people have given Skype their payment details than have Facebook - which results in Skype monetizing a lot better (but still not awesome monetization - yet, but it is improving).

Edit: Facebook has never published total registered, see

http://www.facebook.com/press/info.php?statistics

It is difficult to apples v apples with skype + facebook since their methodologies vary, but it seems that the fb active user base is ~3x Skype

ukdm• 15 years ago

I believe the 170 million refers to the average number of users who connect and use the service every month. The 600+ million is total accounts.

panacea• 15 years ago

For what it's worth, there are 27,999,404 people connected at the moment (according to my Skype application).

nikcub6• 15 years ago

If you look at the SEC IPO filing[1], the most recent numbers (Dec 2010) are as follows:

* 663M registered accounts

* 145M connected users

* 8M paying users

The 170M number is the most recent update of the 145M connected users number. They define 'connected users' as active within a financial quarter

I have spent the past few hours reading through the SEC filing. Skype is still growing very strongly[3], especially in the key metrics of active (connected) users and paying users (both up 30%)

I think this is a great deal and will work out as well for Microsoft as PayPal did for eBay. See my comment in the other thread about that[2]

As I mentioned in that thread, Skype is not profitable only because they wrote down assets and acquisition costs to the tune of over $350M. Within Microsoft it will profit near $500M this year (my back-of-the-napkin sums by projecting out the old revenue figures with the new growth figures). A PE of 17-19 is not a bad buy, considering the strength of the brand and the large user base.

Skype is probably the largest non-browser web/net application, and likely the second largest social graph after Facebook.

What will be interesting now is the question of if Microsoft will work with Facebook on Skype, or use it as a platform to compete with Facebook.

[1] http://www.sec.gov/Archives/edgar/data/1498209/0001193125110...

[2] http://news.ycombinator.com/item?id=2531885

[3] From their filing: "We have significantly increased both our free and paying users, growing our average monthly connected users by 38% and average monthly paying users by 19%, from the three months ended December 31, 2009 to the three months ended December 31, 2010."

hessenwolf• 15 years ago

Really only 8 million paying users? That sounds very low... given it is the only online company other than adwords with my credit card details.

bvi• 15 years ago

What will be interesting now is the question of if Microsoft will work with Facebook on Skype, or use it as a platform to compete with Facebook.

I recall reading a few articles on Facebook exploring a partnership with Skype - it certainly would be in Microsoft's best interests to harness Facebook's social graph through Skype. If Facebook decides to roll out its own Skype competitor, that would cause some serious dent to Microsoft's pocket.

cptskippy• 15 years ago

>They define 'connected users' as active within a financial quarter

This number is inflated by the fact that Skype requires you to login periodically and use any credit you have in order to keep it from expiring.

toddmorey• 15 years ago

Why is it that I like Skype less on the other side of this announcement? It's not that I'm anti-MSFT; I just like communications software like Skype to be vendor neutral, competing on innovation and working to keep as many platforms + devices as possible at parity. I don't want someone to use Skype as leverage to try to get me to switch platforms. I'm more likely to drop Skype and be left looking for an alternative.

codeup2• 15 years ago

There may be alternatives that cover Skype functionality at least partly if you have the skills and nerves to use them (based on SIP or jingle). But for most of the 170 million connected users, including those who use Linux, there is no alternative to Skype if they want the same featureset (im, voip, video, encryption, conference calls,...). Sad but true.

roadnottaken3• 15 years ago

GChat is pretty idiot-proof, and platform-independent.

mahrain2• 15 years ago

I feel the same way. I've already looked for an alternative Voip solution and found Nimbuzz to be a good candidate. I'm probably not going to buy any new Skype credit.

stcredzero• 15 years ago

Truphone?

sunchild• 15 years ago

Agreed. This is, overall, bad news for users of Skype because it will now be part of the only company fighting to keep people locked into a desktop platform. Then again, the only reason I use Skype is because the Windows users on the other end of the line have no better option.

p4bl0• 15 years ago

> Microsoft will continue to invest in and support Skype clients on non-Microsoft platforms.

I don't personnaly use Skype for various reasons, but for the people who do, let's hope that's true.

code_duck• 15 years ago

That's certainly my concern. I have somewhere approximating zero faith that they will continue the Linux client, considering Skype themselves have essentially abandoned it, and the prospects for the other two I use, Android and Mac, seem rather dim. We do have 30 years of MS history to go by here, after all.

roadnottaken3• 15 years ago

Hopefully Microsoft is swooping in to save Skype from the death-spiral it's been heading towards for the last few years. There really is a lot of room for improvement (software-wise) and I'm going to give MSFT the benefit of the doubt for the moment.

josefresco• 15 years ago

Met a guy last year who worked on the last major version of Skype and he admitted it was garbage. He said the new version (not sure if it's out) is drastically better. Besides the quality of the client software, I'd hesitate to say they were in a "death spiral". MySpace is in a death spiral, Skype not so much.

rbanffy• 15 years ago

I don't see a new Linux version coming...

xtfunlp• 15 years ago

I was thinking the exact same thing when i read the headlines. But not that the linux client is (was) as good as the mac or windows versions...

kesun421• 15 years ago

I use Lync at work, and I like it. The features are there, but nothing is in your face. Hopefully Skype will not adopt some of their design concepts.

nikster• 15 years ago

The "new" Skype on OS X is certainly total garbage. They just keep making the UI worse and worse. MS isn't exactly know for making great UIs so I am not holding my breath there.

xnerdr• 15 years ago

On a side note, why has no serious competitor to Skype appeared? Given the maturity of the tech involved (its just VOIP) and the size of the pie, i'd have thought there would be more competition for a slice.

Kliment• 15 years ago

Network effects, mostly. Pretty much everyone in the market has already got Skype, and it works well enough to make switching a greater pain than keeping on using it. And it's entirely unworkable to convince friends, colleagues and clients to all switch over.

taken112• 15 years ago

its only not happening because there is no better cross platform client. all competitors so far offer less or have more constraints, if skype is not the best offering anymore people will switch.

nikcub6• 15 years ago

> its just VOIP

Strength in brand. Most common-folk users have no idea what voip is. You can't compete with Skype by just doing a voip client - if that were true then you would see Google Talk, Facetime etc. eating into Skype market share, and not Skype growing 30% per quarter.

For many people, Skype is online communication and messaging. It has become a verb and one of the most recognizable online brands alongside Google, Facebook etc.

MatthewPhillips• 15 years ago

Plenty of competitors have emerged but they all have gotten strong-arm tactics from Skype, whether we're talking about the Nimbuzz fiasco or Skype blocking fring, or Skype buying Qik, no competitor has been able to make it easy for customers to make a switch. Qik came the closest (unlikely the others, they didn't need Skype integration due to their deal with Sprint) so Skype just bought them.

qeorge2• 15 years ago

I believe the underlying tech, Global Index, is patented and valuable. Global Index is the p2p matchmaking software that runs under Skype (and Kazaa back in the day), which means Skype doesn't have to run centralized servers to route call data. Its also what lets them punch holes in firewalls.

My understanding is that their competitors don't (can't?) do this. For example, SIP runs through a central server (e.g., Google's). This allows Skype to run their service more cheaply, and its cheaper to provide service for each marginal user. Its a pretty strong network effect.

So, in addition to their brand and userbase, they do have some tech MS might want and can't get elsewhere.

cygwin98• 15 years ago

This maybe the case for those small VoIP startups, but for big Internet Co. such as Google, Microsoft and other portals who already have big datacenters, this should not be an issue.

tene• 15 years ago

You seem to be confused about SIP. SIP is the "Session Initiation Protocol", and its entire point is to coordinate initiation of a direct session between endpoints, the so-called "SIP Trapezoid".

SIP is a lot like SMTP. When you make a SIP call, you talk to your local SIP server, which talks to N intermediaries (usually 0) before going out to the public internet. After passing off to the destination server, the connection can go through N intermediaries on the remote side before being delivered to a final user agent. This connection isn't for delivering audio and video, though, it's for coordinating a direct RTP connection to use for audio and video. Once the two endpoints are communicating, they send information about their real network location, work out details about NAT, and set up a direct RTP connection, possibly using STUN to deal with NAT issues. In a normal SIP environment, neither party's SIP server ever sees any of the actual media.

This is all fairly similar to what skype does, except skype has additional infrastructure for routing media through other clients, in cases where two endpoints can't find a way to communicate directly, as I understand it. I'm not actually authoritatively-informed about skype, though, so don't rely on this last bit.

mklappstuhl• 15 years ago

I'm curious to see what Microsoft will do with the more or less unmaintained Linux version of Skype.

bad_user• 15 years ago

You don't have to guess.

20after4• 15 years ago

Probably nothing. It will continue to be more or less unmaintained.

takameyer• 15 years ago

I see this as a good thing. Currently Skype is used in my workplace, and poorly at that. Mostly because the contact information isn't in sync with Outlook accounts. This could probably be alleviated with some sort of process, but no one has taken the reigns on that. So if this syncs up nicely with the Microsoft programs I'm forced to use everyday, it'll just make things that much easier.

trekmambo• 15 years ago

Oh lord, does this mean fb is going to own skype data? Just no escaping the claws of Zuckerberg.

mauriciob• 15 years ago

What does Facebook have to do with Microsoft?

evolution• 15 years ago

I'm not sure if he meant this but Microsoft is investor in Facebook so apparently Facebook getting access to the Skype technology.

yahelc• 15 years ago

1.6% of Facebook is owned by Microsoft.

launcap• 15 years ago

Maybe MS can clean up Skypes habit of puching big holes in your network security - it's one reason why it's banned here..

rimantas• 15 years ago

It's one of the reasons why it is popular: because it just works for ordinary users, without the need to do something about network configuration.

blahpro• 15 years ago

If Skype is "punching holes big in your network security", you’re doing it wrong.

mahrain2• 15 years ago

This should put some pressure on Google to allow international customers into Google Voice. They have an opportunity now to take on all customers this deal might alienate, but since I don't live in the US I can't use Google Voice.

peregrine2• 15 years ago

My girlfriend has been traveling abroad and we haven't used Skype once. We just used the built in capabilities of Google Talk. Its a simple plugin for the browser, doesn't sit on my machine bugging for updates and slowing down my startup time.

No dropped calls, good video quality, and simple integration.

dataminer• 15 years ago

I have been using google talk but recently switched to skype because my wife got an iphone and google talk does not work on it. Skype on iphone is really painless to use and call quality is also very good.

peregrine2• 15 years ago

Thats one of my biggest gripes, there is not Google Talk voice on the phone. I don't think Carriers would like it very much if Google had a free voice platform.

heri0n• 15 years ago

Perhaps this will be a good opportunity for open-source alternatives to finally take off if Microsoft kills off the Linux/OS X/iOS/Android versions...

wtracy• 15 years ago

Can't happen, at least in the US, for patent reasons.

paraone• 15 years ago

Windows version written in delphi.

jmjerlecki• 15 years ago

So do the co founders list themselves as 2X entrepreneurs? lol "Oversaw the successful acquisition of Skype to eBay and Micorsoft." Talk about double dipping.

Sigma11• 15 years ago

Am I the only one finding this simply amazing how Niklas and Janus managed to sell same technology/business twice?

Granted, there was an incredible mistake on eBay part not doing proper due-diligence, but pulling off what they did takes a lot of chutzpah for sure.

This most probably going as a case-study into modern economy text-books.

tttp• 15 years ago

Can anyone shed light on this: "share the vision of bringing software innovation and products to our customers"

Are they the only one sharing that vision? Are they software companies with a vision of dumping obsolete software and products to their customers ?

Big fan of stuffing fluffy meaningless statements into each PR. This one is a keeper.

LarryA2• 15 years ago

"read share the vision of bringing software innovation and products to our customers" as

Grab a piece of (someone else's) software innovation and products and sell those to our customers.

lotusleaf19872• 15 years ago

Skype+Kinect+XBox actually sounds pretty cool, even WP7 seems to have some potential. I actually think MSFT made a good move and it was worth it to keep Skype out of the hands of Google/Facebook.

If I were Microsoft I would even look at buying out Pandora/Spotify/Slacker/Last.fm, Netflix, and remove the file limit on their Windows Live online storage to compete more directly with Dropbox and others--then there'd actually be incentive to use a Hotmail/Live account again and with a plethora of subscription services they could set up their own app store that would compete a bit better with iTunes and sync with Xbox Live. Something else powerful is it would be one bill for your Xbox live, online storage, email, movie rentals, games rentals (potentially), apps, music subscription, and VoIP calls.

awa• 15 years ago

They already have Zune subscription for music which is pretty awesome ($15/mo for unlimited streaming + you get to keep 10 songs). I had no idea that they had a limit on files on Windows Live storage though they do allow 25GB of free storage

lotusleaf19872• 15 years ago

Yeah I know they have Zune subscription, I should have clarified that, but that's why I think Netflix would fit with them well. Having music+movies and giving a discount for the more services you bundle like Comcast/AT&T's double/triple play deals.

encoderer• 15 years ago

I've been thinking the same thing.

Look at the modern smartphones. The lesson I take from iPhone and Android is that if you build a device that has a fair amount of memory, a modern processor, and an array of interesting sensors and input devices, developers will build for you amazing applications, killer apps even, in ways you're not able to imagine.

I imagine a next-gen xbox. It has kinect built in. Great APIs for that. It has Skype and Xbox Live and the various Windows Live services all built-in, with great API's for those, treating them as services.

You push the appstore model via xbox live on that device and I bet $10 that developers produce some amazing things for that platform. Perhaps even game changers. It revolutionizes computing in your living room the way that the iPhone revolutionzed computing in your pocket.

I also think... you'd have a very powerful remote control and connection ability to that device using every new Nokia phone (and any new phone on WP7).

Final thought along those lines is that WP7 is really a great mobile OS. I bought a new phone just last week. I'm on Sprint, so the HTC Arrive was available to me which is a new WP7 phone. I had to decide against it and went for an Android device but that was begrudgingly because there's no 4G WP7 phones in Sprint's line-up. (Ended up going Evo).

Here's the thing... WP7 just FEELS good to use. Way moreso than Android and also moreso than iOS. It's very snappy. It uses screen space well. And the Arrive has a GREAT physical keyboard, the best I've ever used on a phone.

No 4G killed it. Also, no removable SD card. And finally there was the Apps issue but they've put out some great dev tools for WP7. I think it's only a matter of time before they catch up.

Also I'm skeptical that the voice UI works as good as it does on Android.

Sorry for taking this slightly off topic but to bring it back around it's this: Microsoft could really do some great value-adds with Skype on a number of their platforms.

zmonkeyz2• 15 years ago

I'm loving my WP7. Oh well maybe next time :)

klinquist• 15 years ago

apt-get remove skype

smcguinness• 15 years ago

My hope for this deal is that Microsoft partners with CLEAR (or any nationwide data provider) to create a VOIP Windows Phone.

LarryA2• 15 years ago

I predict that in two years they will have successfully marginalized their investment into 'Microsoft Skype' - part of the OS/Office/Outlook suite.

zmonkeyz2• 15 years ago

I was really hoping Sony would be smart enough to adopt Skype one day as their game chat system but oh well.

ignifero• 15 years ago

What's next, MS? LinkedIn?

dforeman• 15 years ago

I just don't think Skype is a 8.5 billion dollar feature, especially any MS implementation. It's not like Skype was a closed platform- they have an API and their policy is to let the market decide which UX will win. I'm sure MS could have built all the features they want without buying the company. Apple already used the video conference marketing gimmick anyway and it's not exciting anymore. Who uses Facetime? Video conferencing solutions are good enough.

Microsoft to acquire Skype

Related Stories