Microsoft confirmed to buy Skype for $8.5 billion

By on May 10, 2011, 6:47 AM

Update: Microsoft has confirmed the acquisition.

Microsoft is reported to have closed an $8.5 billion all-cash deal for the Internet voice and video calling service Skype. The Wall Street Journal says to have confirmed the news after GigaOm first reported it yesterday, and Redmond is expected to make it official in an announcement this morning. This would be the company's largest acquisition yet, ahead of the $6 billion it paid for online advertising company Aquantive in 2007.

It's been a long road for Skype, founded back in 2003, which was first acquired by eBay in 2005 for $2.6 billion in what's considered a failed experiment to have buyers and sellers communicate via voice calls on the auction site. The latter gave up on Skype in 2009, selling a 70% stake to a group of technology investors. Despite their huge user base and household name in the world of communications, Skype was still on its way to becoming profitable, but with eBay and partners anxious about the delayed initial public offering they had been pushing for a sale of the company.

It remains to be seen if the next phase of Skype's life as part of Microsoft proves a better fit than its former owner. Some suggest the service could be integrated into consumer products such as the Xbox 360 and Kinect, or into Microsoft's flagship Office suite and other enterprise offerings to compete against Cisco and Google. However, most agree that the biggest reason for Microsoft to buy Skype is Windows Phone 7.

The software giant would benefit from a competitive alternative against Google Talk with video and voice chat on Android as well as Apple's FaceTime. It also gives them a chance of working with carriers as they transition to LTE-based networks and are finally more open to routing their voice traffic through applications like Skype.

As reported earlier Google and Facebook had also shown interest in either partnering with Skype or buying the company. Given that the former already has a voice service in place it would seem that Facebook is the sore loser in this battle, but it might actually reap some benefits without having to plunk down the cash. After all, Microsoft is an investor in Facebook, and the social network already has a previous arrangement with Skype on which it can build upon.




User Comments: 39

Got something to say? Post a comment
Guest said:

What the **** ?!! No Skype for Linux anymore xD

Guest said:

Wish it was Facebook buying it...they could of done some cool things...Microsoft will just kill it. I mean Microsoft has some cool things but when it comes to their live products and email they suck.

ET3D, TechSpot Paladin, said:

Yes, being bought by Microsoft can be a death warrant to a piece of software. One of my favourite 3D modellers, trueSpace, died that way. We'll have to wait and see what happens with Skype. One of the great things about Skype is indeed its cross platform support, and if that dies then I'm sure it will lose some popularity.

Arris Arris said:

Wonder if this will go the way of Groove Networks...

Jibberish18 said:

8.5 Billion.....IN CASH!

TorturedChaos, TechSpot Chancellor, said:

I really hope they don't screw it up. I know a lot of people that rely on it to talk cross country and to other countries. I use it to keep in touch with friends on the other side of the US. Would be very sad to see M$ screw that up.

CamaroMullet said:

Yeah, hopefully this works out well. Who knows?? It might be a good thing, maybe some tight integration into Win8? But probably, I'm just being optimistic today.....

lawfer, TechSpot Paladin, said:

I seriously don't know what to think or feel about this.

Guest said:

Just another good free app sucked up by the Borg that will either a) turn into a "premium" app with minimal/outsourced support, perhaps with a barely functional free version with no support or, b) be killed outright. Microsoft's miserable support record with their companies and software offerings has already carved the writing on the wall.

gwailo247, TechSpot Chancellor, said:

Guest said:

Wish it was Facebook buying it...they could of done some cool things...Microsoft will just kill it. I mean Microsoft has some cool things but when it comes to their live products and email they suck.

So they can sell the voice prints of your Skype conversations to a third party? I'll pass.

lawfer, TechSpot Paladin, said:

Microsoft's miserable support record with their companies and software offerings has already carved the writing on the wall.

I'm no M$ fan, but please don't be a hater. What SOFTWARE has received miserable support from Microsoft?

SSaywell said:

I don't get what everyone's hate is with MS, just because it's MS it will be crap although if it were Apple buying Skype then it would be amazing. Lets look at this; iTunes for Mac GOOD , iTunes for Windows in comparision Suck . Office for Windows GOOD , office for Mac GOOD . Point proven

captainawesome captainawesome said:

this is NOT good. Don't get me wrong - I LOVE Microsoft. I even worked for them for a couple of years. But I agree with Guest - their Live products are crap. And I'm sorry but I don't see them releasing any more skype for lin - which means we going to have to make abomination software to get it working like Windows Live currently does.

Guest said:

hmmm...let's see...miserable support:

MSN groups (remember those? Killed.)

MSN chat (ditto)

Hotmail (support is laughable)

Windows Live Spaces (touted as a replacement for MSN groups, support dropped followed by loss of customers, subsequently foisted off to WordPress)

Windows Live One Care ("premium" security software left subscribers twisting in the wind when support dropped).

Microsoft medialess policy (remember when we got operating system disks with our computer purchases? Now we have a "recovery partition" that is pretty much useless if Windows won't load or recovery media that won't work if a hardware change is instituted.)

Windows uninstaller utility (Good and useful app, yanked when it was found to be incompatible with the latest MSOffice. Wouldn't it have made more sense to keep it in circulation with the caveat not to use it with that program?)

I could go on, but you get the point?

yRaz yRaz said:

Stop worrying. Once MS buys it someone else will popup and we will all rush to them. Look at open office VS libre office. I don't really have a problem with this, I'm just going to take my business else were as soon as someone new arrives.

Guest said:

Ha! Ha!

Microsoft fell for it hook, line and sinker. Facebook says to Google, "Hey I bet you $1 that we can get Microsoft to blow about 8 Billion dollars. Google says "No way!" Then Facebook says "Lets talk publicly about partnering with Skype." So, now Google owes Facebook $1.

Guest said:

Office for Mac BLOWS.

ET3D, TechSpot Paladin, said:

SSaywell said:

I don't get what everyone's hate is with MS, just because it's MS it will be crap although if it were Apple buying Skype then it would be amazing. Lets look at this; iTunes for Mac GOOD , iTunes for Windows in comparision Suck . Office for Windows GOOD , office for Mac GOOD . Point proven

Nobody (except you) said anything about Apple. I'm sure if Apple bought Skype everyone would have said it sucks, too.

Every change causes worries. It's always easy to think about the bad things that could happen. For example if Facebook bought Skype I can just imagine all my conversations being shared by default with the world.

SSaywell said:

ET3D said:

SSaywell said:

I don't get what everyone's hate is with MS, just because it's MS it will be crap although if it were Apple buying Skype then it would be amazing. Lets look at this; iTunes for Mac GOOD , iTunes for Windows in comparision Suck . Office for Windows GOOD , office for Mac GOOD . Point proven

Nobody (except you) said anything about Apple. I'm sure if Apple bought Skype everyone would have said it sucks, too.

Every change causes worries. It's always easy to think about the bad things that could happen. For example if Facebook bought Skype I can just imagine all my conversations being shared by default with the world.

The point I was making is that people where saying it was bad because MS had brought it, not because it had been sold, and on other sites they were saying how bad that is for the tech world etc, I just point out that people hate MS because it's MS and for no other reason. The reason I commented here is cus this is the only site that I'm signed upto.

lawfer, TechSpot Paladin, said:

Guest said:

hmmm...let's see...miserable support:

MSN groups (remember those? Killed.)

MSN chat (ditto)

Hotmail (support is laughable)

Windows Live Spaces (touted as a replacement for MSN groups, support dropped followed by loss of customers, subsequently foisted off to WordPress)

Windows Live One Care ("premium" security software left subscribers twisting in the wind when support dropped).

Microsoft medialess policy (remember when we got operating system disks with our computer purchases? Now we have a "recovery partition" that is pretty much useless if Windows won't load or recovery media that won't work if a hardware change is instituted.)

Windows uninstaller utility (Good and useful app, yanked when it was found to be incompatible with the latest MSOffice. Wouldn't it have made more sense to keep it in circulation with the caveat not to use it with that program?)

I could go on, but you get the point?

No. As neutral as I am about M$, I'll give you a few history lessons.

MSN Groups was not "killed." It was simply, let's say, modernized. And by doing so, M$ integrated it with its set of Windows Live Services.

MSN chat had the same fate. Instead of MSN chat, its now a feature of Windows Live Messenger. Why have an IRC client, when you can have a full-featured instant messaging application?

Hotmail. How in the world is the support of Hotmail laughable? What else do you need other than read/send e-mails? Not to mention it is currently the largest e-mail provider. Gmail is much much better, but to be honest, if something were to happen to my Gmail, I could live with Hotmail pretty comfortably. You could say the same with Yahoo. They are all good (free) services. Oh, and Hotmail received a major update just like 8 months ago...

Windows Live One Care was, again, renovated. Ever heard of Microsoft Security Essentials?? Let's move on.

"Microsoft medialess policy" Lol, what are you talking about? M$ has NOTHING to do with that. Blame OEMs who are being cheap. The only OEM that includes an actual copy of the OS, is Asus, to my knowledge. And WinRE is a recovery feature that is not correlated in any way to that.

"Windows uninstaller utility" You mean "Add/Remove Programs" in Windows XP, and "Programs and Features" in Windows 7? I believe I just answered that.

Now, the only software M$ has truly killed off is Windows Live Spaces. And rationally so. Why maintain a declining service that was trying to compete with the behemoth that MySpace once was, and the coming Facebook? If its users don't want it, why keep it? That wouldn't be called support. Alternatively, you seem to have a misconception of what software support is; this is clearly noticeable on the examples you've written.

Most of those programs were created in the 90s, and had been progressively updated. However, new, greater features have been thought up, new protocols have been invented, and new services have surfaced. Competition is always great for the consumer, and this also applies to (even free) software. You clearly seem to be clinging on old software that have inevitably gone through a blooming era of technology and have been either outperformed or replaced (by either own, external programs or a combination thereof). All the programs that have (luckily) lived trough these phases, have been not "killed"; they've been renovated (according to the times), renamed, or otherwise integrated into existing and/or newly created services. You just never knew.

Wagan8r Wagan8r said:

Guest said:

Wish it was Facebook buying it...they could of done some cool things...Microsoft will just kill it. I mean Microsoft has some cool things but when it comes to their live products and email they suck.

I don't think you pay $8.5 billion to turn right around and kill it. This isn't the government we're talking about.

Chazz said:

The microsoft hate is hilarious. Can the fanboys please exit the building on your right.

Guest said:

"No more Linux Skype"

You can always use GNU telephony.

http://planet.gnu.org/gnutelephony/?p=14

Or save yourself time/money, buy a new $299 PC with Windows7 already installed. You'll have access to the same exact freeware plus more. No need to fiddle with Wine, which was defeating the purpose anyway.

Guest said:

lawfer, you are the one who needs a history lesson.

MSN chat was killed with the excuse being that chat generated opportunities for pedophiles to have access to minors. Truth, Microsoft was busy with Windows Live and didn't want to support it anymore. Same with groups...they simply didn't want to update the technology and cut it loose (or rather, foisted adult groups off to one company and the remaining groups off to another). Instead of fixing what they had and what was used, they launched Windows Live which, by comparison, has been a resounding failure.

Hotmail's "support" speaks for itself. It's absolutely terrible..even worse than Yahoo's. That's not just my opinion, it's the opinion of other users. There are websites devoted to the horrendous lack of support for it with lots and lots of members sharing their tales of woe.

Microsoft's medialess policy is indeed Microsoft's, and not thought up by OEMs. If you're confused, read this:

http://books.google.com/books?id=rzkEAAAAMBAJ&pg=RA1-PA1
7&lpg=RA1-PA117&dq=Microsoft+medialess+policy&
ource=bl&ots=6kdxunDlwO&sig=Pf_jxOOecCRHQE8yp4HlIZ
pD5U&hl=en&ei=yarJTcK8LYnL0QGZpfzQBw&sa=X&
i=book_result&ct=result&resnum=1&ved=0CBYQ6AEw
A#v=onepage&q=Microsoft%20medialess%20policy&f=fal
e

Microsoft admitted it, point blank with the excuse being "it would cut down on piracy". So, treat your customers like criminals and make it virtually impossible to use any of the myriad of fixes posted on microsoft.com that all required an operating system disk to work.

I have been online since the mid 90s and seen things come and go (go mostly). Good apps bought off and killed by competitors, or turned into premium apps, is the way of the world and the way of business. The list is long and I wouldn't be a bit surprised to see Skype headed down that road. Hopefully, another app will come along to take its place.

Guest said:

@"Guest

on May 10, 2011

4:20 PM"

Microsoft will continue to do what they will continue to do, whatever it takes to keep their business running. As does Apple and Google (Apple & Google also buy companies, take what they need, and discontinue it, or find a way to monetize it.) That's just the nature of the beast. As for Windows live,failure to you is success to others. I use Windows Live Admin center for FREE email for some of my business clients. Windows Live Movie Maker totally kicks butt, as do some of the other Live apps, and I find they are a great FREE value. If you don't like what Microsoft has to offer, there are plenty of other free and paid options. (Android/ChromeOS/IOS).

Guest said:

Trust me, I go out of my way to not use Microsoft apps. My point was and has been from the beginning, Microsoft's purchase of Skype will not turn out to be a good thing for its users....maybe not immediately, but ultimately, and people should be looking into other options now instead of waiting for the inevitable. This reminds me of what happened with Danger (makers of the Sidekick). MS buys them out, recruits their talented personnel, then abandons the technology. Presto, competition eliminated.

gwailo247, TechSpot Chancellor, said:

I'm confused. So we DO want MS to include everything with their OS, or we think its monopolistic and unfair to their competitors?

Besides, being on the internet since the 1990s myself, one thing is for sure is that if some previously useful program disappears or gets bought out, or stops being free, there will be 5 new programs offering the same free functionality the next day, as there does not appear to be a shortage of developers or computer science majors these days.

Guest said:

Lets hope the people over at Sourceforge are all over this.

Guest said:

Oh and btw, uninstalling via add/remove programs or programs>uninstall a program in the Control Panel is not always successful. That's where the very handy Windows Installer Clean Up Utility came in handy. After all, if there were no problems, there would have been no need for that app, yes?

lawfer, TechSpot Paladin, said:

Guest said:

lawfer, you are the one who needs a history lesson.

MSN chat was killed with the excuse being that chat generated opportunities for pedophiles to have access to minors. Truth, Microsoft was busy with Windows Live and didn't want to support it anymore. Same with groups...they simply didn't want to update the technology and cut it loose (or rather, foisted adult groups off to one company and the remaining groups off to another). Instead of fixing what they had and what was used, they launched Windows Live which, by comparison, has been a resounding failure.

Hotmail's "support" speaks for itself. It's absolutely terrible..even worse than Yahoo's. That's not just my opinion, it's the opinion of other users. There are websites devoted to the horrendous lack of support for it with lots and lots of members sharing their tales of woe.

Microsoft's medialess policy is indeed Microsoft's, and not thought up by OEMs. If you're confused, read this:

[link]

Microsoft admitted it, point blank with the excuse being "it would cut down on piracy". So, treat your customers like criminals and make it virtually impossible to use any of the myriad of fixes posted on microsoft.com that all required an operating system disk to work.

I have been online since the mid 90s and seen things come and go (go mostly). Good apps bought off and killed by competitors, or turned into premium apps, is the way of the world and the way of business. The list is long and I wouldn't be a bit surprised to see Skype headed down that road. Hopefully, another app will come along to take its place.

I'm not discussing the causes, but simply the effects. You're argument is that M$ has a "miserable" product support, and mine it is "not quite."

As I said, I am neutral on M$. I'm not defending their business practices, I'm defending their reliability as a company when it comes to supporting their products and services.

You say there are a lot of people who complain about the "support," of Hotmail, but like I asked earlier, what support? What software update do you need to make Hotmail better at, well, reading and sending e-mails? Please, I would like to know. I would also like to know why it's still the largest web-based e-mail provider in the world, if there are other alternatives with better "support"?

And I'm not discussing the reason as to why M$ ditched MS Chat, I'm saying there was no need to have an IRC client, when at the time, instant-messing technology was blooming. It was a totally different concept to be able to communicate without the use of a web browser, and without connecting to servers. Just launch up the program and there you go. Like I said: new ideas, protocols, and services were invented in the 90s. MSN Chat is what Messenger is today. Just renovated. The name might have been taken off, but it's the same type of service.

And that media-less policy thing. Regardless of what M$ said or did, they have NO word on whether your newly bought PC comes with a OS disk or not. An OEM such as, say, Dell, has licensed a certain amount of Windows computers in production, with Windows 7, for example. After the OS is bought, it is up to the OEM to include such disks with the product. It's not illegal to (not) do so, as the OEM has already bought the software from M$. In contrast, I've bought 2 Asus gaming notebooks this past year, and both came with an original OS disk, and a drivers disk. So your 11-year-old argument falls short, not only because is not relevant anymore, but because even at the time of that publication, OEMs still had the option to include such disks, and some still do. I personally don't consider not having the original OS disk a lack of "software support." Sure it is corporate greediness, but lack of support per se? Nah.

And I just said Groups is integrated with Windows Live Messenger! (Just like it was integrated with MSN Chat) It was never cut loose, but merely integrated into a full-featured software. Go download Messenger, and see for yourself.

Windows Live a resounding failure? No, sir, that's what you want to believe. The live services is just behind Yahoo, and YouTube. Yes, YouTube. And ahead of Twitter. Yeah, put THAT into perspective. While you might not like its software, M$'s services are among the biggest (worldwide, that is). You can hate M$ all you want (I'm not exactly fond of their software either), but I give credit where is due.

I'm not saying Skype will be great with M$. I'm merely against the belief M$ has been supporting its software miserably, as you suggested. Like I said on my first comment, I don't even know what to make of this Skype transaction. It could be bad, it could be good... Or a mix of both. Hey, Apple does it that way, and people seem to love it.

Wendig0 Wendig0, TechSpot Paladin, said:

Don't you people realize the implications of this?! Sky.net has become self aware...

Zen Zen, TechSpot Paladin, said:

Don't you people realize the implications of this?! Sky.net has become self aware...

So you mean to tell me, either seriously or jokingly that Microsoft is Sky.net? Well until I see the proof, MS to me will stay a serious powerhouse in the world of Operating System creation and development and distribution. Also being a Office software manufacturer.

Heck I will be up there in Seattle in August for a meeting, might have to pack up my Microsoft Engineering credential and take a self guided tour of the place.

If I see any T-800's or T-850's or T-888's or even a T-1000, or what I think was the hottest model of all the T-X, the sexiest terminator, if I see any I will post back here and let you know!

Exit Note - In regards to Skype & Microsoft, I think we all should just sit back and wait and see what is going to happen. Companies get bought out all the time, companies merge both information and technology during a merger or buy out. People get nervous when a tool or tools that they have been using for years and are comfortable with are possibly going to change or be discontinued. As some have said here, if someone doesn't like one program or app, there are different ones out there to choose from. So in the end if someone doesn't like what Microsoft has done to Skype then don't use Microsoft Skype, maybe use the talking and video chat through Yahoo Instant Messenger. But for the moment I'm detecting a lot of "spinning your wheels in the mud" out of concern, worry, fear, or maybe a knowing or unknowing hatred for Microsoft in general.

Companies get created, companies rise, companies thrive, companies plateau, companies dip, companies start heading for the ground, companies crash and companies burn and yes sometimes companies get bought out! It's all about the world of big business, it's their version of a jungle and everyone wants to be king of their respective jungles.

I'm going to hold off on judging this situation until I see more "after the fact" with this buy out.

Guest said:

"Guest

on May 10, 2011

4:46 PM Trust me, I go out of my way to not use Microsoft apps. "

"medialess policy proof! Here read this magazine articlez!"

"Oh and btw, uninstalling via add/remove programs or programs>uninstall a program in the Control Panel is not always successful. That's where the very handy Windows Installer Clean Up Utility"

So are these problems from an OS made 10yrs ago (XP) still hold true to Vista and Windows 7 today? Me thinks sometime in the 90s, when Microsoft burst down your door and ripped teh labels off your mattress, you "converted" to a radical "GNU" OS? And because you hate Microsoft so much, you want us all down this same terms of enlightenment?

Who needs paint.net, mSoffice, and advanced 3D FPS games * video editing when GIMP, cinelerra, and 3d tux racer is ALL YOU EVER NEED!

No thnx, I use the best tool for the job at hand, and currently for my business, my clients, and my gaming needs, its WINDOWS. If something better ever comes along, than I will switch. Until then, you're not taking my windows OS and all the cool freeware replacements I could never find on that "GNU" OS.

ET3D, TechSpot Paladin, said:

SSaywell said:

The point I was making is that people where saying it was bad because MS had brought it, not because it had been sold, and on other sites they were saying how bad that is for the tech world etc, I just point out that people hate MS because it's MS and for no other reason. The reason I commented here is cus this is the only site that I'm signed upto.

It case you haven't noticed it's Microsoft who's buying Skype. Who do you expect hate to turn against? All I was saying is that if it was Apple you would have gotten just as much hate, if not more.

Guest said:

A complete and perfect communication system can handle video, sound (voice), text and all the combinations of those. That's mean text to speech, speech to text, translate on the fly (for later that), face recognition etc

Computers with kinects and connected to the internet are the clients of that system.

Microsoft I think is the only company who can make something like that reality.

Guest said:

I bet that heads in Microsoft are smart enough for don't try killing the competitors (especially if they can see their code ;) ) because then don't want end fat and slow. So Linux has a serious possibility to keep the skype too.

Guest said:

"Ballmer adamant Microsoft keeping Skype alive for Mac, Linux"

Read more: http://www.electronista.com/articles/11/05/11/microsoft.ceo.
ows.support.for.non.windows.skype/#ixzz1M4vsKizU

http://www.electronista.com/articles/11/05/11/microsoft.ceo.
ows.support.for.non.windows.skype/

It's pretty much still an independent division.

Wendig0 Wendig0, TechSpot Paladin, said:

because then don't want end fat and slow.

what?

Guest said:

... because they don't want end up a fat and slow company, I meant.

Fast typing :)

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