Microsoft Buys Skype for $8.5 Billion

Posted on May 10 2011 - 10:24pm by Robert

The anticipated purchase by Microsoft of the internet calling service Skype has been reported as having been completed today.

The price is a staggering $8.5 billion and it is the single most expensive transaction in the long history of Microsoft. Skype has a user base of around 170 million and is now the world’s biggest provider of international phone calls.

While 2010 saw over 200 billion minutes of calls being made, the vast majority of those were free PC to PC calls which don’t make the firm any money, and the bosses at Skype have been struggling with a long term debt and a recent decrease in revenue. Europe is the main centre of the firms paid calls, as the lower calling costs in the US don’t make it as attractive over there, but paying customers make up well under 10% of the total users.

The official word from Microsoft is that all the Skype features and functions will be added to Windows smartphones, the Xbox gaming machines and their Outlook email service, replacing the existing internet calling options on them. However, they will also keep the Skype service going on the existing platforms which also use it currently.

Previous stories had both Facebook and Google trying to both Skype, but now it is Microsoft who will try to cash in on the huge user base and obtain more revenue from online transactions rather their current software based approach.

How do you see the future for Skype under its new owners?

Source: Bloomberg

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