Microsoft’s $US8.5 billion acquisition of Skype is likely to prove a boon for the software company’s channel partners who would now be able to augment their existing offerings with voice and video capabilities as well as more sophisticated mobile solutions.
Microsoft CEO Steve Ballmer said Skype is a part of Microsoft's plan to "empower people with new technologies that will bring them closer together." Skype fits in well with other Microsoft products like Outlook and its Xbox gaming platform. Skype's popularity is a big opportunity -- the Skype brand, Ballmer noted, "has become a verb."
On the subject of how Skype will translate into opportunity for Microsoft business customers, both Ballmer and Skype CEO Tony Bates were vague. Ballmer mentioned "value creation" and tying together Skype functionality with the company’s unified communications platform Lync. Bates said the business customer base that's strong with the Microsoft portfolio will be "taken to the next level over time."
Founded in 2003 by software developers and later owned until 2009 by eBay, Skype reported that it has some 170 million connected users and accounted for more than 207 billion minutes of voice and video conversations in 2010. Skype is seeing 40 percent growth in users year over year, and had 20 percent revenue growth year-over-year as well.
Microsoft confirmed its acquisition plans for Skype earlier Tuesday. According to Ballmer, Microsoft made an unsolicited offer for Skype several weeks ago, and finalized the price on April 18. The deal was signed Monday night, and Microsoft will use overseas cash to pay for Luxembourg-based Skype.
Skype will become a new business division within Microsoft, titled Microsoft Skype Division, and Bates will become president of that division, reporting to Ballmer.
Ballmer and Bates did not address how Skype will be made available to Microsoft channel partners or any integration or product roadmap plans. There was also no mention of what happens to Skype's fledging partner program, which launched last fall.
"We're committed to the Skype user base," said Ballmer, who added Microsoft will work on continuing to build and increase that base, and also continue to invest in Skype on non-Microsoft client platforms.
In a later question-and-answer session, Bates dodged the question of whether Skype had other serious pursuers, saying Skype was "very focused" on its IPO and evaluated Microsoft as an acquirer after the unsolicited offer was made. Google, Facebook and Cisco were all rumoured to have been looking at Skype in recent months.
Asked about Skype's often tricky relationship with telecom carriers and service providers - with whom the service competes as a lower cost IP communications alternative - Ballmer said Microsoft's partnerships with carriers for its Windows Phone platform will remain "fundamental."
The move is being viewed in the industry as a master stroke for Microsoft as it seeks to develop a more web-centric application story in response to Google’s recent overtures in the space.
Flick to the next page to learn how Microsoft may integrate Skype into its portfolio.
Integration
Microsoft recently released its Office 365 beta, which has so far been warmly received by customers and analysts. With the acquisition of Skype it will now be able to integrate audio and video calling into Office 365, Outlook and web mail products.
While Google has been spruiking its video capabilities, such as via Gmail, for some time it failed to gain much momentum largely because of the loyalty of Skype users.
Once the deal is settled Microsoft will have a presence of tens of millions of smart phones equipped with Skype Mobile, supporting reliable video and audio calling, even at 3G speeds. Microsoft is also expected to integrate its Bing search engine into Skype on phones, laptops and PCs.
In addition, the marriage between Microsoft and Skype will also give rise to lucrative possibilities on the advertising side, a key part of which would be social networking sites like Facebook, of which Microsoft owns 1.6 percent.
Nadeem Ahmad, global technology director for Dimension Data said from a consumer perspective, Microsoft’s Skype buy makers perfect sense, but the enterprise implications are not immediately clear. “They know everyone in the consumer world is using Skype,” he said. “They’re seeing an opportunity to corner that market on the conferencing side.”
Ahmad said the Skype acquisition works with Microsoft’s bid to dominate in both the home and the office and Skype also plays into its mobility story, where it can be used as a de facto voice/conferencing service for tablets.
Sean Connolly, general manager and vice president of network integration at Dimension Data, says the acquisition gives Microsoft the ability to strike on the merging of consumer and business IT. “It enables Microsoft to seize that opportunity,” Connolly said.
But not everyone is happy about the deal.
Skype has typically operated as an open platform solution and many have warned that Microsoft may imbue it with proprietary features and make it harder, for instance for users running Apple or Google’s operating systems.
When Bob Venero, the CEO of Future Tech, a Holbrook, New York solution provider that recommends Skype to international customers, learned Tuesday that Microsoft was buying the Internet video communications provider in an $8.5 billion blockbuster cash deal, his heart sank.
"I was concerned when I heard about the deal," said Venero. "Generally when Microsoft gets their hands on something it becomes more convoluted. The biggest danger for Microsoft is letting this get caught in the Microsoft bureaucracy.
"The worst thing they could do is mess with Skype," said Venero, who also uses the Skype Internet communications video service for international business. "Microsoft needs to think about growing and expanding Skype -- not constricting it."
That means not fine tuning Skype to work only with Microsoft products, Venero explained. "Skype works on the Apple iPad and iPhone and it has for quite some time," he said "Are they going to continue down that open path or are they going to make it a Microsoft only product?"
This article originally appeared at crn.com
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