Skype: Going Going Gone for $8.5 billion to Microsoft

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By Salar Golestanian @ Wednesday, May 11, 2011 :: 12:49 AM :: 486 Views :: 0 Comments ::

This morning We woke up to one of the biggest deals this year in the IT world with Skype Going Going Gone for $8.5 billion to Microsoft, the largest deal in the software giant’s history. IMO the size of the deal makes me think it was like an Auction scenario that took the price so high.

The price represents a hefty premium on the $3 billion to $4 billion Google and FaceBook were said to be considering for the service not so long ago. So I have a feeling that this was prompted by some insider auctioning situation between FaceBook, Google and Microsoft. This price is certainly more than the company would’ve been valued at in an IPO which Skype had filed for but earlier this year was reported to be delayed.

From my perspective, the delay in IPO was an indication that they have been talking to number of people with regards to selling it rather than IPO approach. Otherwise, they had no real reason to delay the IPO. This clearly strengthens my guess that Skype must have been in negotiations with more than one buyer and therefore, my hunch for the auction type negotiations behind the scene.

Skype’s revenues are approaching $1 billion per year, and are a clear front runner in the VoIP provider world and therefore for Microsoft it was essential to keep it out of competitor’s hands. There are also some intriguing integration possibilities across Microsoft products like Kinect, Outlook and Windows Phone that could push Skype to the next level. But it also puts Microsoft closer to a world where people cross devices communicate both in chat, phone and desktop share. This is more than what any other social networking tool can do right now.

My personal worry is how Microsoft will change Skype. IMHO the product is great, I currently have Skype Pro account and I always have Skype credit to allow me to talk internationally with customers phone lines.

I love my Skype Pro features that come with very little monthly payments and this is what I get: which is a great deal and must be one of the revenue streams bringing that $1bn a year for Skype. Here is what I get:

Nothing per minute nationwide calls
For calls to any phone within the US and Canada* (with no connection fee).
Save up to 60% on a personal online number
A Skype In number that lets people call you at local rates.
Call transfer
Transfer calls to Skype contacts, phones or cell phones.
Save on the move with Skype To Go
International calls from your cell phone at local rates.
Voicemail – never miss a call
Pick up messages when you’re busy or offline.
Free nationwide calls to any phone within the US and Canada

But for me the real saver was that recently it allowed me to share my desktop with customers in a conference call. This allowed me to cancel my GoToMeeting account with a saving of about 50 USD a months.

And for Microsoft it seems that it is a good fit since it is truely cross platform and users are businesses, gamers, kids and even much older folks like my dad that has to use it to talk with family in different countries. But also here are some of advantages that Skype brings to Microsoft.

Skype’s has 170 million active users — and clear growth plan.
The fact that 40% of Skype’s activity is video.
Skype’s role in mobile communications that is even beyond standard SmartPhones as with Skype it is possible to take iPod, iPad or other WiFi Only devices act like a phone.

For me the most important feature is desktop share when I conference call. This is one that I would be most upset if the deal with Microsoft undermines it.