$8.5 Billion for Skype

Microsoft has purchased Skype for an astounding $8.5 billion. Microsoft’s acquisition is the tech world’s most massive deal in years. Previously, Microsoft’s biggest buy was $6 billion for online advertising firm aQuantive in 2007. You can bet that Skype CEO Tony Bates is grinning from ear to ear after Skype had been on the market for some time. Google and Facebook had been vying for Skype but Microsoft swooped in and made the deal.

“The combination will extend Skype’s world-class brand and the reach of its networked platform, while enhancing Microsoft’s existing portfolio of real-time communications products and services,” the companies said in a statement.

Microsoft’s purchase is a smart deal. Silver Lake bought Skype from eBay for a little more than $2 billion in 2009, and the investors are naturally thrilled to turn such a profit. According to an article in the LATimes, Skype will become a new division of Microsoft and will be led by its current chief executive, Tony Bates. “The combination,” Ben Horowitz (general partner of Menlo Park-based venture capital firm Andreessen Horowitz, an owner of Skype along with Silver Lake) said, “will give Skype and Microsoft the competitive heft to combat Google and the Facetime video chat function from the Apple iPhone.” Obviously Microsoft feels the $8.5 billion price tag is worth it.

Skype has had some major competition. Google offers free calls and chatting via Google Voice, while Apple hit Skype on the mobile front with built in video calling on the iPhone. Now with the backing of Microsoft, Skype is poised to steadily grow in the market. Microsoft will become a stronger player in the mobile field, perhaps truly saving the Windows Phone 7. According to an article written by Om Malik, GIGAOM, it gives Microsoft a working relationship with carriers, many of them looking to partner with Skype as they start to transition to LTE-based networks. I’m sure Nokia is thrilled with Microsoft’s new acquisition.

Are you a Skype user? Do you use it primarily on your PC or also on your Smartphone? I have used it many times on my PC, but I find the Android version to be a bit buggy. The messaging system seems to drop the attachments. But on the PC I have been more than satisfied. It’s nice to have a video calling service that’s free. I have often talked with friends living in Italy with great success. You can call anyone already on the Skype network for free. Of course using Skype of your mobile phone will cause you to use up your battery life more quickly, so if you have one of the new Droid phones, I suggest you buy a Droid extended battery. It can make life so much nicer when you don’t have to worry about dropping calls due to low battery charges.

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