Microskype? Skyprosoft? Microsoft Buys Skype

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This is one of those cases where we get to see why rumors are just rumors. Last week we reported that a potential deal between Facebook and Skype was on the table. Today, Steve Ballmer, CEO of Microsoft and Tony Bates of Skype have concluded a deal with Microsoft purchasing Skype for $8.5 billion. This would be the largest external purchase by the former IT behemoth Microsoft.

Skype has been up for sale for quite some time. Facebook and Google were thought to be the major contenders in a bid for the social networking site Skype with Microsoft entering in late into the game.

Google was not really considered a serious contender in the purchase of Skype as they already have established their Google Voice service which offers video, chat, social and voice. Many people are wondering what the sale of Skype will mean for Linux who frequently use the Skype VoIP platform.

Facebook was a major player in the purchase. The social giant has been coming under increasing pressure from its users to offer video and chat VoIP services for some time. If the company had to use conventional methods to offer voice and video service to its 600 million plus customers, the cost and overhead of operating the infrastructure would be prohibitive if not impossible.

Even though Microsoft is an investor in Facebook, the biggest boon comes to Microsoft by being able to utilize Skype’s assets. Of paramount importance is that they will able to keep the property away from their major competitor, Google.

Some speculations suggest that Skype was sold due to floundering sales revenues. Attempts at turning a bigger profit by charging more for their premium services seems to have backfired on the company and forced them to sell.

According to GIGAOM, some of the reasons as to why Microsoft needed to buy Skype were:

  • Skype gives Microsoft a boost in the enterprise collaboration market, thanks to Skype’s voice, video and sharing capabilities, especially when competing with Cisco and Google.
  • It gives Microsoft a working relationship with carriers, many of them looking to partner with Skype as they start to transition to http://en.wikipedia.org/wiki/3GPP_Long_Term_Evolution LTE-based networks.
  • It would give them a must-have application/service that can help with the adoption of the future versions of Windows Mobile operating system.
  • However, the biggest reason for Microsoft to buy Skype is Windows Phone 7 (Mobile OS) and Nokia. The software giant needs a competitive offering to Google Voice and Apple’s emerging communication platform, Facetime.

Using the $8.5 billion price as the likely sale price, eBay gets $2.55 billion for its 30-percent stake in Skype. So in the end, eBay did make money on the Skype deal.

According to GIGAOM, the biggest winners of the sale were:

  • Niklas Zennström and Janus Friis, the co-founders of Skype, with their 14-percent stake, take home about $1.19 billion. Damn, these guys know how to double-dip!
  • Silver Lake, Andreessen Horowitz and the Canada Pension Plan Investment Board (CPPIB) own 56 percent of the company, and that stake is worth $4.76 billion.
  • Andreessen Horowitz had three percent of the deal and made $205 million profit on their $50 million initial investment.
  • eBay gets $2.55 billion for its 30-percent stake in Skype. So in the end, eBay did make money on the Skype deal.

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