Why Microsoft dug deep to snap up Skype

By Stuart Sumner

12 May 2011

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Microsoft Buys Skype

This week Microsoft announced that it will acquire internet telephony service Skype for $8.5bn (£5.2bn).

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The software giant already owns a voice and video messaging service in Lync, but as an enterprise product it is not something often used by consumers.

Skype, however, which will be rebranded as Microsoft Skype, is used by both businesses and consumers. So is this the end of the road for Lync? Leif-Olof Wallin, research vice president at analyst firm Gartner, thinks not.

"I think we'll see Microsoft integrating Skype with Lync. Users working inside the perimeter of the enterprise will be able to reach out and communicate with friends and colleagues in other organisations seamlessly. It will enable unified communications across the corporate border," he said.

Although Microsoft has not yet released details of the integration, Wallin expects that Skype will be added to existing Lync functionality.

"Lync allows you to mouse over somebody's email address to see their status. You can right click on their name and get a menu of how you want to communicate with them. So most likely, you'll be able to see if they're online on Skype, and then right click and get Skype voice and video options."

Forrester principal analyst Charles Golvin explained that the move will further unify previously separate communications media provided by Microsoft.

"The acquisition shows that traditional walls between communication networks and modes have been eviscerated – email, instant messaging, and voice over both fixed and mobile networks are becoming one massive river of communications. Skype will be integrated with Microsoft technology to further unite these communication lines, as well as consumers and businesses," he said.

And Ovum principal analyst Richard Edwards argued that Microsoft had to make the deal in order to keep up with its competition.

"With Apple FaceTime, a competitor to Skype, now available on the Mac, iPhone 4, iPad 2 and the new iPod touch, it is definitely now or never for Microsoft. Skype is arguably the most successful real-time social communication platform on the planet, and it's a great fit for Microsoft's business model," he said.

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