Microsoft acquires Skype for $8.5 billion

| May 10, 2011

The communications service will soon be integrated into Microsoft’s various gaming platforms.


Microsoft has announced that they’re purchased Skype for a staggering $8.5 billion, and while the number has raised a few eyebrows, it could nonetheless prove to be a shrewd move by Microsoft. The company will incorporate Skype’s web-based communications network into existing products like Microsoft Office and Windows phones while also continuing to provide support for non-Microsoft platforms.

The merger will also have a direct impact on gaming. Microsoft plans to integrate Skype into Xbox Live and Kinect, although it’s too early to know what kinds of features will be introduced with the service.

Skype currently has approximately 170 million connected users, while Microsoft has a customer base that tops out around 700 million.

“Microsoft undoubtedly has over-paid for Skype in the short-term, but potentially not in the long term,” said Giles Cottle, Senior Analyst at Informa Telecoms & Media. “Buying Skype gives Microsoft the ability to do whatever it wants with voice to an audience of 700 million users. This kind of scale does not come cheap.”

Skype CEO Todd Bates will take over as President of the new Microsoft Skype Division and will report directly to Microsoft CEO Steve Ballmer. It’s obviously a major acquisition, but others have tried (and failed) to turn a profit with Skype, so we’ll have to wait and see if Microsoft is able to capitalize on the potential.

Sources: Globe and Mail, Microsoft