[☎] Microsoft, desperate to stay relevant, buys Skype for $8.5 billion.

chrischris
edited May 2011 in conversations
Microsoft: Here's Why We Dropped $8 Billion On Skype

Skype is awesome for Microsoft because it's about "connecting your life." Microsoft has communications apps for personal life like Messenger and Hotmail, for work like Outlook and Exchange, and devices like Xbox, Kinect and Windows Phones, and Skype sits at the nexus between all of these, and so there's opportunities in all those areas.

Skype is an amazing business. Usership is growing, revenue is growing, and EBITDA is growing even faster. Microsoft expects the deal to be accretive to earnings by the end of this calendar year.

Steve Ballmer, Microsoft's CEO, was also at pains to emphasize that Skype will keep supporting non-Microsoft clients. And indeed they'd be foolish not to, as Skype's value proposition is that it works on countless platforms.

Skype's CEO Tony Bates pointed out the service has very impressive usage numbers: 400,000 new users join daily, 170 million users use the service each months, and they use it at a rate of 100 minutes per user per month.

Skype will be operating as its own Microsoft division, not as part of the online services division, with Bates as its president.

Comments

  • mickmick
    edited 5:24PM
    yay? the mergers just keep getting mergery-er, don't they?

    maybe Microsoft will do something about the appalling interface Skype has ended up with.

    as long as i get to keep using Skype (gosh i love free international calling), they have my approval. ;)

    how did you get a phone icon in the title?
  • chrischris
    edited May 2011
    i just [✂] cut it from another forum, rather than [✍] write it in myself ;)
  • StuartStuart
    edited 5:24PM
    I saw a tweet about this that pointed out the perspective that HP bought Palm for $1.2 Billion.

    If Microsoft are continuing to buy technologies rather than innovate I have to wonder what it is that their engineers are doing all day. What is (probably) the world's biggest software company actually bringing to the table? Do they even have a culture of innovation at Microsoft?
  • nickonicko
    edited 5:24PM
    No. Have you seen their products?

    You'd think by version 9 of their browser it might actually work / be any good.
  • chrischris
    edited 5:24PM
    i mentioned that $8billion may be a small price for them to pay for google not to buy it.
  • StuartStuart
    edited 5:24PM
    nicko said...No. Have you seen their products?

    You'd think by version 9 of their browser it might actually work / be any good.
    To be fair it is a major improvement but still nowhere near the competition.

    I find it staggering, however, that just because "the big blue e is the internet button" and "Windows is what a computer is" is how much the majority of their customers know about computers they can't provide something brilliant and new. They have a strong position in the PC market because of this ignorance/lack of knowledge and do they think that people will just be dumb forever, and are willing to bet the company on it? Bunch of cocks.
    chris said...i mentioned that $8billion may be a small price for them to pay for google not to buy it.
    But Google have Google voice. I wouldn't put it past Google to buy it to kill it but I think that's a less likely scenario than Microsoft realising (yet again) that they're behind the curve and desperately need a solution yesterday, at whatever the cost.
  • chrischris
    edited 5:24PM
    yeah, they wouldn't buy it to kill it, they'd just roll the user base into the google voice user base.

    some of the quoted figures seem a little stupid, too. but no doubt there are a lot of people that use skype.
  • StuartStuart
    edited 5:24PM
    Oh, Skype is popular, no doubt about that. For a piece of software. The problem with Skype as it stands right now is that it doesn't really make any money. Certainly not $8.5 thousand-millions worth. But, MS obviously know what they're doing.

    (spot the deliberate mistake)
  • chrischris
    edited 5:24PM
    haha yeah :)

    it does take (quite considerable) monies in though, but you are correct.
  • StuartStuart
    edited 5:24PM
    $20.6 million bottom line in 2010, I think. That's not much and by doing some completely unreliable maths it will take MS 412 years to make their money back.

    Good luck!
  • chrischris
    edited 5:24PM
    well, i'd read, at the above link, "$860 million in revenue, with 20% growth year over year, $264 million in EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization), growing 40% year over year"
  • BognostraglumBognostraglum
    edited 5:24PM
    The only part that bothers me about this buy out, is that Microsoft has the opportunity to take what we use as a free product and smack a "small usage fee" per month.

    As soon as that happens... its adios ... goomby... asta-la-vista baby.
  • StuartStuart
    edited 5:24PM
    chris said...well, i'd read, at the above link, "$860 million in revenue, with 20% growth year over year, $264 million in EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization), growing 40% year over year"
    Yeah, I seem to have missed a zero somewhere. I had read $20m for 2010 but $264 does look to be more sensible.

    Your right.
  • chrischris
    edited 5:24PM
    my right what?
  • StuartStuart
    edited 5:24PM
    Your right on the money.
  • jargojargo
    edited 5:24PM
    I use www.jajah.com. No hand sets, uses your regular phone, no $$ or very small amount if you use it LOT.

    What's not to like?
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