back to article Microsoft Skype: How the VCs won and Ballmer overpaid

A trio of Silicon Valley venture capitalists have made out handsomely from Microsoft's $8.5bn purchase of Web 2.0 carrier Skype. The money men have earned themselves $6.6bn in cash selling the unwanted web-telco company that they bought a $1.9bn stake in from eBay, while dodging the pain, paperwork, and inevitable disappointment …


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  1. Deadly_NZ

    Oh Dear

    Now how long before Skype starts to not support the 'other' operating systems, and turns into yet another ad bloated miccyshaft joke worth $5.95. Now whats second best because they won't be there for long.

    1. Anonymous Coward

      How very profound...

      Never heard "miccyshaft" before though.

    2. Bear Features


      Like Apple who fully support FaceTime on Android right? Or how well they make crappy iTunes work on Windows? lol What about their famous office package? lol

    3. Heff
      Thumb Down

      pretty obvious, really

      Skype on winpho7, no longer on android or any other platform, plus lawsuits against similar replacement applications springing up for that need. Ballmer is hoping to co-opt Skypes userbase into becoming WinPho7 users or they lose skype. right now he's probably giggling and rubbing himself, rocking back and forth muttering about how apple and android will lose market share, lose market share, oh yes, precious precious windows.

      the stock market doesn't lie. he really needs this acquisition to work; board of directors/investors wont tolerate another aQuantive, though frankly I wish someone would push ballmer down a flight of stairs along with whatever retarded gremlin at microsoft insists on making a new failing search engine every 2 years, so that MS could maybe get back to authoring new projects* rather than buying out other peoples and playing happy-go-copyright-troll in courts.

      *its been so long I dont remember the last innovation actually pioneered by MS. anyone?

      1. Ammaross Danan


        This is clearly MS attempting to attract users by offering something akin to FaceTime (how well FaceTime actually works is beside the point...). They'll likely keep support for alternative platforms (likely since it's already there), but I could see them being lax on emerging platforms (MeeGo or some other). But Ballmer did get one thing right, it's about market penetration. The more platforms he continues to support, the more users he'll have, and the more people will want to have Skype to talk to them "for free." I'm just hoping his adverts don't become intrusive. A side bar of ads is tolerable. The popup-in-front-of-video that YouTube does deserves to be shot in the head. (I suggest a sidebar since most screens are the usual 16:9 nowadays, making vertical real-estate fairly valuable)

      2. Someone Else Silver badge

        Oh, that's EASY!

        *its been so long I dont remember the last innovation actually pioneered by MS. anyone?

        <crickets />

        1. M Gale

          <crickets />

          What's that? Nonstandard HTML tags?

          Oh I see what you did there.

  2. bojennett

    Video calling is stupid to begin with...

    Nobody has been able to make a good go of this... ever. Everybody I've ever seen try things like this thinks it is "neat", but not so neat that you want to go out of your way to use it. Beyond occasionally bringing it up to let grandma see the grandkids, I just don't see the big point.

    What does video conferencing, for the consumer set, offer exactly? It is harder to set up, drains batteries of mobile devices faster, and doesn't really give you an experience that is worthwhile. Compare this to, say, IM or texting vs. email. There is a benefit of using these services because while it does the same kinds of things e-mail does, the response tends to be more immediate, and you don't have to sift through an inbox to find a conversation. texting/IM is even better than phone calls - does the same thing, but doesn't annoy other people sitting next to you in the coffee shop, for example.

    But, there is "skype out" or the ability to call a phone from skype. But if you have skype on a mobile, assuming your telco doesn't block it, you most likely have a lot of minutes available to make a regular phone call, of higher quality/lower latency, etc.. Minutes are becoming cheaper and cheaper, and with rollover, etc. I have never come close to going over (nor has anybody I know).

    So, that leaves IM/chat. And Microsoft has a chat client that has more people on it than Skype.

    I know Ballmer is a CEO, and therefore apparently smarter than me, but I'm sorry, this deal is asinine.

    1. Anonymous Coward

      the solution is....

      Provide her with more grandkids,

      1. Boggy Bumblebee
        Gates Horns

        I'm not arguing with you (too much) but there is a market

        As a family who has moved overseas, we do use it to parlez with the grandparents and family in general, but at zero cost. I generally spend about $20 a year on topping up my account for those emergency situations when I have wireless but no phone access, but thats about it. Whilst I don't want M$ to change that, I think they will at soem point.

    2. Anonymous Coward

      Video calling is great.

      I had a long distance relationship and we talked and could see each other on Skype almost every evening, for over a year, until I retired and move 600 miles to be with her. She could show me her projects she was working on, or whatever.

    3. Anton Ivanov
      Thumb Down

      You are missing the point

      In 1-2 years we will see LTE everywhere. Voice on it is supposed to work _ONLY_ under IMS control. Once IMS gets its foot through the door Balmer can kiss goodbye to most of potential app, store, media revenue from WinPhone because IMS moves the charging model to the operator.

      On an IMS network you breath in by asking IMS if you can and pay for it, after that you breath out and pay similarly. Everything charges through IMS - media, value added services, voice, etc.

      The only way Balmer, Brin and Jobs can counter that is by having their _OWN_ voice & video frameworks. Google has Google voice, Apple has Facetime. Microsoft till this day had nothing.

      It now has it. It now can twist arms and negotiate with mobile companies on the subject of who will do the billing and how an LTE phone is to operate in reality.

      Balmer has bought the future of the company here. Without it, it would have become the obedient operator cow supplying phones specified to operator specs and getting no revenues but from OS licensing. The number he paid is actually irrelevant. When you buy your future, money is not relevant provided that you can afford it.

    4. Christopher Slater-Walker

      Apple FaceTime

      The generally poor experience of video calling is why Apple insist on your having a WiFi connection in order to use FaceTime, is it not?

      I should own up that I've never experienced FaceTime (although I have tried Skype video calling), but once again, this is an example of Apple calling the shots, and making sure that the User Experience is as good as it can be, but on Apple's terms.

    5. Anonymous Coward

      I think you have a point

      I found it very useful first foreign jolly ( sorry, business trip ) I made my kids were balling their eyes out before I left, two Skype calls from the hotel link on my laptop and they weren't fussed and wanted to know when I was bringing some chocolate and/or toys home from where I ended up!!

      It's good for family's to keep in touch but as you say it never seems to make the leap to the corporate world. My shop a case in point, we spend shed loads on sending people to the remote sites in other countries, we run people here and there in London for one or two hour meetings, time wasted travelling and cab fares, a few simple Skype calls in the big screen conference room and we'd save a mint, no one is interested.

      Almost all laptops have built cams, phones obviously do and webcams for desktops are two-a-penny, why is it not taking off more? Perhaps MS think they can turn this around, perhaps they think that there clout behind it will finally get more time in the meeting rooms of the world's businesses and given the current economic climate save company money, somehow I think not but it should be interesting to see what happens over the next 12 months now they have it.

    6. Maryland, USA

      Heard that before

      That's what the radio industry once said about TV, what makers of silent movies said about Talkies.

      1. Munchausen's proxy

        That's also

        what the keyboard manufacturers said about Cue Cat.

  3. Anonymous Coward
    Anonymous Coward

    I sense a long game here

    Firstly, Microsoft has just acquired a rather large user base. Next, it has to be able to say "You can get the best Skype experience on Windows Mobile" and deliver spectacularly well on that promise (or at least deliver spectacularly well on version 2 of the promise). And when they deliver on that promise, Nokia has to deliver sexy phones and we know they can do that. And that's just the mobile spin on the purchase. Skype's strength isn't about its technology but a user base that relies on Skype as a VOIP and messaging platform.

    I sense a very traditional Microsoft long game here - the kind of values Microsoft needs to return to, and scale up to in the 21st century, if Microsoft isn't to go the way of Novel, Word Perfect, Lotus 123, Ashton Tate and so on.

    1. Neil Greatorex

      Re: AC 23:47

      "Microsoft has just acquired a rather large user base"

      Sorry, in Microsoft's world, 170 million users is extremely small beer.

      Wish it were otherwise.

      1. Glyn 2


        170 million may not be a lot compared to the total number of Microsoft clients but if most Skype users aren't Microsoft users, it's an "in" to a new, untapped market place. Isn't it? That and there aren't many companies/organisations with huge user bases. After microsoft, apple, facebook, twitter, amazon, ebay and the like there's a long drop to the next level of userbases like the reg for example :P

    2. bojennett

      Respectfully disagree...

      I just have to disagree with the "very traditional Microsoft long game". It is a popular myth, but it is a myth. IE was an "oh crap" purchase, PowerPoint was an "oh crap" purchase, .NET was an "oh crap" response to Java, MSN was an "oh crap" response to AOL (at exactly the wrong time, as the internet was taking over traditional online services), Bing is like the umpteenth iteration of Microsoft trying to respond to Google, Zune was an "oh crap" to the iPod, WinPhone7 is an "oh crap' to the iPhone/Android, etc. Heck, even Silverlight is an "oh crap" response to Flash (again, at exactly the wrong time), and XPS is a lame attempt to take on PDF.

      There is this myth that Microsoft has this long view, but the only real example anybody can point to is Windows, which only started becoming interesting when things like GEM started getting useful, and really only became successful when they did under-handed (and eventually illegal things). Remember the "Windows ain't done until Lotus won't run" rumors?

      Microsoft was born on third base (chosen by IBM for the PC OS) and thought they hit a triple. When stripped of their ability to "cheat" (bundling features to eliminate competitors, hiding APIs, etc.) they've fallen down... consistently. Now they are reduced to throwing their cash reserves around hoping to hang on to "something".

    3. Steve Davies 3 Silver badge

      re: The long Game

      I see two flaws in your argument

      Next, it has to be able to say "You can get the best Skype experience on Windows Mobile"

      That will become(after 1yr)

      "You can ONLY get Skype on Windows Mobile"


      Microsoft has just acquired a rather large user base

      will become

      Microsoft has just acquired a rather rapidly shrinking user base

      Mines the one with two tin cans and some string in the pockets.

    4. Big-nosed Pengie

      deliver spectacularly well on that promise

      I suppose there's a first time for everything.

    5. Anonymous Coward

      "Microsoft has just acquired a rather large user base."

      AOL also acquired a rather large userbase when it bought ICQ.

  4. This post has been deleted by a moderator

  5. Anonymous Coward
    Anonymous Coward

    we're missing something

    The deal is overpriced at first sight, so i get the feeling there might be more than the tip of the iceberg in this deal. maybe there are other technologies that are being acquired with this deal, maybe the cloud behind skype... what else could it be, you think?

  6. gerryg

    BBC World Service 0130ish BST

    Having had Rory Cellan-Jones repeatedly tell us that Skype has ben bought by the company whose software runs on over 90% of the world's computers - how much would you have to pay for that advertising, we now get the BBC interviewing Balmer.

    Of course RCJ gets to interview his idol and we get to hear more promotion puff and Balmer is very excited, we discover.

    "Tone" amusingly talks of the great opportunity "going forward", yes he's just sold it for a shedload, his only worry being that the cheque might bounce. He talks a full bingo card of business bullshit - example: "this deal supercharges Skype to the next level"

    (Where's Lucy Kellaway when you need her?

    I think the most perceptive comment I've seen is here, (just £5 will do...) wondering how many people use skype because it isn't Microsoft. Could be the best thing to happen to Google talk.

    1. Anonymous Coward
      Anonymous Coward


      How many people use Skype because it's not Microsoft?

      I'd guess (outside of a few people commenting on this thread) practicall no-one has even though of using Skype because it's not MS, they use Skype becuase it's Skype and that's what their mates use. In the same way that people use Google or Facebook becuase it's what everyone else uses, people bearly think that there is a company behind these services. At home I have skype installed on Windows, Mac OS and Linux because it's what the family and a few friends use, I wouldn't even have it installed on anything, particularly Linux (the Linux client is terrible) if not for that reason.

    2. Gordon 10 Silver badge


      Does he actually have *any* credibility as a tech journalist?

    3. turnip handler

      His idol?

      I assume this is the same Rory Cellan-Jones who insists on showing his iPad in every piece to camera?

      Not sure that Balmer is his idol, more that he is a tech reporter who doesn't mind flatering the big players he speaks to.

  7. Ian 55
    Big Brother

    Problem is, there are no bigger idiots to buy it off them

    This is the second time someone has paid appallingly over the odds for Skype. What's in the water coolers there than makes buyers go mad?

    If Microsoft do mess around with it, people will go elsewhere. VOIP isn't hard.

    About the only reason to buy it that I can think of that makes sense is that there is a serious secret subsidy from the NSA who want to be able to listen into Skype calls. With it owned by Microsoft, they could have the encryption 'enhanced' so that they can.

    1. EveryoneCanFlyOnceRusty

      will Skype have to comply with US warrants?

      Skype - once it is owned by a US company - will have to comply with (warranted and possibly un-warranted) US wiretaps and the 'concerned' calls from powerful (and well-lobbied) politicians who don't like something somebody is saying over Skype.

      If you are concerned about MS, then you don't understand Homeland Security, the NSA, and the US Gov't very well...

  8. Jolyon Smith

    MSN may have more people on it...

    ...but that doesn't alter the fact that it sucks worse than Skype.

    MSN killing features in Skype:

    - being able to retrospectively edit IM messages already sent/received

    - being able to view IM history as if it just happened, rather than in some abomination of an XML style mangled list view

    - being able to see when all messages were sent/received, not just the most recent one

    - not randomly disconnecting and reconnecting during the day, every day

    - it doesn't have "winks" and "nudges"

    Yes, Skype had it's supernode failure recently, but overall it is FAR more reliable (for IM) than MSN.

    And yes, MSN has custom smilies, but big frikkin deal.

    We can only hope that MS doesn't throw all these good things away, and force us to come up with yet another alternative to the MS mediocrity machine.

  9. This post has been deleted by a moderator

    1. Doug Glass


      Arithmetic average = $70,000+ is the good ol' USofA.

    2. Anonymous Coward
      Anonymous Coward


      "Microsoft is now the worlds largest telco"

      shouldn't that be "Microsoft is now the worlds largest telco but also the one with the smallest ARPU"

      doesn't sound like such a long game to me.

  10. Destroy All Monsters Silver badge
    Paris Hilton

    Skype is worth more than Sun?


  11. Neil 7
    Gates Horns

    If Skype were based on open standards

    I very much doubt Microsoft would have been interested in Skype.

    Microsoft are interested in the 100mn+ active users that Skype have, and they're only interested in those users because they use a proprietary service that they can control 100%, and that others will find hard or impossible to muscle in on with compatible client software.

    Sure this is a long game, but they will also be providing clients only for devices that don't compete effectively with Microsoft - there's absolutely no way Skype will appear on Sony PS3 hardware for instance, and it will only appear on iOS, Android and Linux because it's already there, though it will most likely stagnate and become a second class experience.

    I like Skype on my Nokia N900 - it's fully integrated to the point you hardly realise you are using it to make or receive a call, but then so is Google Talk and that's what I'll be suggesting my friends and family use in future as the embrace of Microsoft around Skype is unlikely to end well.

    Effectively "buying" Nokia for a pittance and without the pain of running a mobile hardware maker was a genius move (for Microsoft, a dark day for for everyone else) but actually paying serious cash to own Skype is just crazy when they could have done everything Microsoft needed them to do - ie. integrating their client into any and all of Microsoft's products - for a small fee.

    Is owning Skype simply to restrict it's presence on other competing platforms really worth $8.5bn? Ballmer may say that support for Skype on non-Microsoft platforms is essential in the communications business but I think we'll see the reality of this soon enough and we'll see that open standards/SIP/XMPP based VoIP is the only way ahead.

  12. Adrian Esdaile

    Photos never lie

    Why does Steve Ballmer never look happy?

    1. Shonko Kid
      Gates Horns

      He looked pretty pleased the other month

      Shaking hands with his old pal Elop, and getting one up on his old boss Gates in the process - he never managed to get that deal with Nokia...

    2. showady


      Because money doesn't buy you happiness!

  13. Guus Leeuw

    Messenger vs Skype

    Dear Sir,

    The best hing about Skype is that it can behave as a telephone with minimal call charges. A client of mine in the Netherlands gave me a mobilephone but then complained about the costs as I am in England most of the time. So, I setup a Skype landline number, and make them pay my Skype bill. The total cost of my telecomm solution has come down around 50%. Good for them.

    My wife uses Skype to call her family abroad and this lowers her telecomm bill by about £100 a month. Which is a Good Thing(TM) Patent Pending.

    Not sure how valuable it is to have Skype integrating into Office except for the communicator and the various address books, but then again the communicator is used for a quick chat or when someone's phone doesn't work, so that might a nice idea.

    Skype on mobile seems, indeed, rather pointless:

    1) You need coverage to receive a skype call on your mobile

    2) It is annoying that when you're logged in to Skype on various devices all devices start ringing at the same time

    3) You more or less have a calling plan on your mobile anyhow

    I would want to see what Microsoft does, if anything, with the callcharges. It could be a nice milkmachine that can be turned on like a tap: more or less money depending on how cashstrapped Mr Ballmer feels any given month... This is where my greatest fear is, indeed: While I trust Skype to do the Right Thing(TM) Patent Pending, I don't quite feel the same about Microsoft...

    Maybe now is the time, though to stop that silly credit card restriction that Skype is running: Only three top-ups per month with the credit card, otherwise use Paypal. From where Skype came from, I can understand that restriction, but now that Skype and Paypal are not sisters anylonger, we can hopefully start doling out cash in a more unrestricted manner...


    Guus Leeuw

    PS: We need a thumb-iin-the-middle icon...

    PPS: Beer, as there is no coffee icon...

  14. itspoyle

    I think cloud based telephony could be the biggest win here

    Personally I think Microsoft have made a wise move here. A comment I am sure to get shot down in flames for. With their SAAS based cloud offerings now becoming a major part of their strategy (am I the only one who has seen the ads???) it's clear that real time communications as a cloud based strategy is an absolute requirement. Currently MSN or Live messenger cannot break to PSTN, nor can any of their hosted enterprise offerings. An area mined with all sorts of complexity, regulatory requirements, billing etc etc.. Skype are already there..This therefore provides the vital link to a hosted PBX to millions of their customers both in consumer and enterprise world wide. Worth $8billion?? THat is eye watering, we'll have to wait and see ...Flames so I am prepared.. :)

  15. Anonymous Coward
    Anonymous Coward

    Web telco company stake L@@K!!!

    "the unwanted web-telco company that they bought a $1.9bn stake in from eBay"

    Did they snatch it with a bid at the last second? And did they pay instantly via PayPal?

  16. tempemeaty

    There goes another one

    There was another company with technology MS needed. It was a 3D software company called TrueSpace. MS bought the company, got what they needed from TrueSpace then killed it. I'm now feeling that again...

    1. StooMonster


      Was talking about that TrueSpace debacle last night with friends.

      I'm waiting for the inevitable rebrand for Skype from Microsoft's marketing department, how long before we see it renamed...

      Microsoft Windows Live Skype Instant Messenger powered by Bing

      That slips off the tongue so much more fluidly than Skype don't you think?

    2. John Smith 19 Gold badge


      "MS bought the company, got what they needed from TrueSpace then killed it."

      A close look at Microsoft history will show that is SOP.

    3. Giles Jones Gold badge

      Much earlier than that

      Same with Blue Ribbon Soundworks in the 1990s. I used to use their really cutting edge MIDI Sequencer called Bars and Pipes on the Amiga. Nothing else at the time did real time MIDI adjustments using a pipeline and plugin tools (think real-time quantise, real-time echos, real-time transpose and so on). I still don't think any other sequencer to this day does, the focus is now on audio plugins.

      As far as I can see Microsoft bought them and never used any of their technology.

      1. Anonymous Coward

        Buy and Kill

        Microsoft has a history of buying companies just to take technologies off the market.

        There used to be this mobile operating system that some of you might remember, called Symbian. Now, before Symbian was called Symbian, it was called EPOC, and it ran devices such as the Psion Series 5. The Psion had a web browser called Web, which was developed by a company called STNC.

        In July 1999 Microsoft bought out STNC, and killed the product. Until Opera was released in beta in February 2000, a supported Web browser for Psion devices didn't exist.

        Exhibit A :

  17. Dana W

    Too bad.

    On hearing the news I uninstalled it from everything in the house, phones included.

    Any bets on how long it takes Microsoft to completely destroy it or make it as miserable and useless as Hotmail?

    1. Test Man


      So you uninstalled the software that worked fine before the acquisition and still does? You really need to get help.

  18. Philip Cohen

    What about Donahoe's share?

    Even though eBay apparently still owns 30% of Skype, if this Skype deal does go ahead at anywhere near this price it will be interesting to see how eBay’s "Chairman Ho" will spin the matter on his CV—which he will undoubtedly have to update in the not too distant future, if his ongoing dismal performance at eBay is any guide.

    My God, who would now employ this cretin? Regrettably, I think that when the time comes we will be surprised how this fool and his Bain Tool Kit will slide into another senior position somewhere. For instance, incomprehensively, Intel has this headless turkey on its Board!

    Enron / eBay / PayPal / Donahoe: Dead Men Walking.

  19. Anonymous Coward
    Anonymous Coward


    I just hope they release an Xbox Kinect version soon, and don't cripple it to limit you to talking to other XBoxes.

    I wonder what will happen to Sony's PSP skype now?

    1. Anonymous Coward
      Anonymous Coward


      That was the first thing I thought of when I saw the article headline.

      Kinect with your friends though Microsoft Skype!

      We've already seen Kinect used to make a motion tracking eye of Sauron, why not use it for automatically adjusting video conferencing?

  20. JaitcH

    Could this be a delayed April Fools joke?

    Business media channels report that the decision was made by the Microsoft way back in April.

    Could it be the jokes on MS?

    At least MS won't have my real email address, I always use a different address, each time, when signing up for things.

  21. Anonymous Cowbard

    Cheap international calls

    One big Skype plus for me is cheap international calls.

    I have friends and family in USA and Europe, calling them by Skype is around 10% of the cost of calling them via landline or, perish the thought, mobile.

    Call quality from my laptop is same or better than via a phone.

  22. Mystic Megabyte

    Dream on!

    I seem to remember that Hotmail became like a Prozac induced nightmare.

    Pop-ups with smiley, "have a nice day" social integration useless rubbish. Adverts for "groovy stuff" and other unwanted geographical based information like weather etc.

    I also seem to remember using Windows but it might have just been a drug induced dream.

    Our government is meant to protect us from drug dealers, maybe they should start doing something.

  23. Boring Bob
    Thumb Down

    Shouuld have paid attention in math class

    "40 per cent customer growth and 20 per cent revenue growth means only half of new users are paying for Skype"

    Assuming you can say anything from the figures above it would be that new customers only spend half of what the existing base of customers do. I doubt very much that half of new customers pay for Skype.

    1. Heironymous Coward

      Restated in slightly different terms

      Their revenue per customer this year is about 85% of what it was last year. Not a good trend, methinks...

      And there are plenty of alternatives out there. We all use Skype at work but my boss is already looking at alternatives.

      As to overpaying - $8.5 billion for a company that has $860 million in revenue?? All I can think of is MS must have been desperate for a tax write-off...

  24. GatesFanbois
    Black Helicopters

    Missing Something

    MS didn't over pay in the slightest. This whole buyout was obviously done at the behest of the department of homeland security, as they couldn't eavesdrop on terrorist calls, they got a nice frindly US company to buy out Skype so that they can listen. Now watch some nice fat juicy government contracts go to MS.

  25. lIsRT

    Don't worry.

    Microsoft are still committed to supporting Skype on Unix platforms - based on rumours from inside the company, Skype for Xenix is just around the corner.

  26. Zog The Undeniable
    Gates Horns

    Dear Steve

    I have a handful of magic beans here. Yours for $8bn. Deal?

    1. Anonymous Coward

      Not a chance.

      MS knows Magic Beans come from Sun, which is now Oracle.

  27. AM in Brussels

    oh oh

    I use Skype exclusivly for phone calls from home, and have done so for the past 5 or 6 years. I live in Belgium, but parents live in Ireland, with other family members all over the world. My wife the same. However, we don't use the windows or mac clients.

    I have a Skype Dualphone which plugs in directly into the router. Or I use the Skype client for the iPhone or Android (my wifes and my mobile phones), so chat and video calls are irrelevant to me.

    No Belgian telecoms operater can come close to matching the prices Skype offer. I pay about 6EUR for a package which consists of free landline calls to most of the EU, and a local number in Ireland. Calls to mobiles in an eastern European country are 24c/min.

    I calculated that my savings are in the region of about 50EUR per month.

    I really really hope that MS don't force me to change to someone else.

  28. DS 1

    Everything is cloud/azure and intergration is heir new religion

    As far as I can see, MS is being totally re-focused. Its entire build processes are being re-aligned and its all based around cloud/azure. The add ins that you build a cloud structure are a sum of parts.

    In future, if/when Skype is embedded deep in most MS products, with deep intergrations, and the data, compute and managemet is in azure/local/hybrid, is cheap, and powerful, and fixes multiple areas of legacy difficulty/failing, its basically starting again with a blank page, but better.

    Microsoft has for a while been looking to try and bring communication together and have it intergrated. Buying skype and its move into azure is all part of a new strategic aim at MS.

    Don't under estimate this, every sinew there is being driven by this, for this, to this. There is no question on the committment or where they want to go, only if they can hang it al together.

    Expect a lot of if 'Azure'.

  29. A J Stiles

    Problem with Skype

    The problem with Skype, and even more so now Microsoft are involved, is that it is the absolute antithesis of what telecommunications needs to be about.

    A subscriber with one telephone company has to be able at least to contact subscribers with any other telephone company. That much ought to be self-evident. It is also highly desirable, where multiple telephone companies are competing for business in the same physical space, to be able to use the same equipment with any of them. Such interoperability requires open standards that can be implemented by anybody, and the most preferable way to achieve this is through an Open Source reference implementation (think: OpenBSD and the Secure Shell, or Apache and HTTP servers). Which is why, among those in the know, voice-over-IP invariably means Asterisk.

    Skype's proprietary nature means that only Skype "subscribers" can talk to other Skype "subscribers", and potentially runs afoul of some European countries' telecommunications deregulation and competition laws (except, as we all know, normal laws don't apply anywhere there is a computer involved).

    My guess is, what Microsoft want out of this deal are (1) the measures built into Skype to frustrate reverse engineering and (2) the increased opportunities for vendor lock-in which will inevitably come from integrating Skype into Office.

    1. Anonymous Coward

      @A J Stiles

      Interoperability does not in any way require open standards. Skype already have remarkable interoperability in all the places that matter. I have no problems calling numbers on landlines, mobiles or other VOIP facilities using Skype. Interoperability for telecomms means having the right interfaces at the boundary of your system. Running an efficient system means having the right technology for the platform on which you operate, regardless of whether that is an open source implementation or something else entirely. Running on the most appropriate technology is the reason in the US Verizon are on different technologies to AT&T and provide a far superior service as such.

      1. A J Stiles

        Epic FAIL

        "Interoperability does not in any way require open standards."

        Did you really just write that?

        Do you not understand the meaning of interoperability, or do you not understand the meaning of open standards? Because politeness forbids me to accuse you of smoking crack.

        1. JaimieV

          Semi fail at worst

          Your first post is flailing in the wrong direction.

          Perhaps you aren't aware that

          a) Skype calls are gatewayed into national phone networks worldwide, leading to local call prices for many (maybe most) skype-to-landline or skype-to-mobile calls

          b) Skype will happily sell you a voice line number located in the geography of your choice, and will then route calls to that number to your Skype ID

          Only one end of that gateway is using open standards, and it's not the Skype end.

  30. Anonymous Coward


    Like quite a few here, I am glancing around for an alternative service to Skype which offers everything Skype does (stick with me here). I must say, it's a tall order in my case, not least because I want to make voice (and if poss, video) calls not only between desktops/laptops (Win, Mac, Lin, etc.), but between those and Nokia (Symbian) mobiles (mine and my wife's).

    Voice calls over the Net? No problem - we use a SIP provider, compatible with all the above platforms.

    Video calls over the Net? A tougher call, especially when you bring the Nokias into the equation. There are plenty of other cross-platform "videophone" solutions for the desktop/laptop, but very few on Symbian (and none capable of desktop-Symbian video). We use Fring for Net-based video calls between our mobiles, but Fring has no desktop client - it can hook into Google Talk, but can't offer video-calling via the service.

    I think I'll be sticking with Skype for the moment (for lack of a "drop-in" alternative, and because we call my parents with Skype when they are abroad), but speaking as a user of Skype on Linux and Symbian, that doesn't mean I'm exactly welcoming this development with open arms.

  31. fishman

    Patent portfolio

    I wonder what the Skype patent portfolio looks like - maybe MS figures that they can make some money off of it.

  32. Joe Harrison

    Skype is great for travellers

    The only time I use Skype is when I am in a hotel room in a foreign country. Nearly-free calls back to the UK via free wireless and Skype Out easily beat arm-and-leg mobile rates. It does work absolutely great for this with zero setup problems.

    Yes I am a SIP user the rest of the time but while travelling I really hate being behind an unknown NAT fiddling with the stun settings in the hope of getting my call working.

  33. ratfox

    Office on Mac?

    Oh yes, good example. Does Ballmer know that Excel for Mac does not support VB scripts anymore? Does he know the pain that resulted for the users when that support was dropped?

  34. Glitterball

    No Skype on WM7 was a dealbreaker for me

    At present there is no version of Skype for WM7.

    There is no flash support on the iPhone.

    That's why I bought an Android phone.

    If there was no Skype or Flash on an iPhone then you'd have to be out of your mind to buy one.

    Did they overpay? probably, but it gives them a lot of power.

  35. Fred Flintstone Gold badge

    Just when I thought the Skype UI couldn't get worse..

    .. there comes Microsoft, which means it'll get the dreaded, productivity removing "ribbon" interface. The Skype UI on OSX is rubbish, but I think it will look like genius compared to what will happen when MS gets its hands on it :-(

  36. Just browsin'

    Well thats gonna kill Skype... Time to find another service!

    So MicroShite bought skype!! and as steve Davies says a rather large userbase will become a rather shrinking database...

    It won't be long before people move from Skype to seomthing like Qnext or something less microshitty.

    All that microsoft manages to do is to kill everything it buys, bloat it and add that useless service called bing. they refuse to conform to standards with IE so why should they make skype a good service.

    Its no wonder that Microsoft is failing rapidly.

    Sorry to be negative, oh well.

  37. Hayden Clark Silver badge

    Azure-isation of Skype infrastructure

    ... that will do for the reliability.

  38. Maryland, USA

    3-way videochats

    Today, Skype charges $8.50 a month for the privilege of starting a group video chat. If Microsoft offers it for free--on any Skype platform--I'm all for it.

  39. Anonymous Coward


    'Microsoft's biggest excuse for not putting apps such as Silverlight on other platforms has been its constrained resources....'

    Pass the keyboard cleaner someone, there's a load of cheese and onion sandwich in mine now!

  40. Anonymous Coward

    Y buy skype

    Doesnt MSN Messenger have all these features..........?

  41. Justin Clements

    Video - why does everyone miss the point?

    2 Reasons why video calling sucks:

    1. You are trapped in front of your computer. With a voice call you can use a headset (as we frequently do) and wander round the house/office, make a cup of tea, pick your nose etc.

    2. Strangely enough video doesn't actually add anything to the experience of communicating. I don't actually need to see the person I'm talking to. Maybe it's because we're experienced at having no video, but the video really is a distraction that ties you to one task - the video call.

    1. Mikel

      Video doesn't add anything?

      "Strangely enough video doesn't actually add anything to the experience of communicating."

      Ok now turn the camera to point at the back of the computer. Oh, I see. That black cable has come undone. Plug it back into the wall.

  42. Ebaneezer Wanktrollop

    The licensing plans will be cool !

    So Skype will be free provided you have it pre-installed on a new PC. You'll be entitled to a certain amount of words per hour on the 'Home' version over which you will have to subscribe to the 'Sentence Subscription Assurance' plan which will allow you talk a little longer but without intrusive voice ads from Go Compare.

    Business users of course will have per user licencing, policed by voice recognition technology and tied to being able to talk only in the area you were when you purchased your subscription. Outside of that area another licence will have to be purchased for each square foot you enter plus a Client Calling Licence for each new caller you contact using the service.

    I believe Skype, in time, will be renamed Wank.

  43. Luther Blissett

    Extend? Embrace? Extinguish?

    I would think twice before laying bets on this one, given the way M$ managed to screw over the DoJ, but the XMX strategy is time-dependent and needs the moves to be made at the critical juncture. I suspect Ballmer is rehearsing his past successes with this one, and given the latest financials vis-a-vis Apple, it smacks of desperation. In the past M$ has relied more on bludgeon than finesse to crowbar its successes, so it will be entertaining to watch the SS M$ gradually sink below the waves (unless Windoze for Warships fails in action first, and we all disappear in puff of plasma).

  44. Anonymous Coward

    Xbox Live Gold Feature

    soon then....

    Remove PSP support, can the PS3 Skye launch.,,.,,

  45. Yet Another Anonymous coward Silver badge

    Non-microsoft software

    Balmer wanted people to be able to make Skype calls on winmobile7.

    Nobody has been brave enough to explain to him that you can run non-MS software on Windows, so he assumed they had to buy the company

  46. joe.user

    Captain Business 101 Here

    Save $7 Billion and do it yourselves, but better. Peer to peer is inefficient as it sits. $1 Billion would get you a hell of a lot of tech and R&D. If I were a shareholder (I'm smarter than that) I would be pissed off right about now.

  47. J 3

    "today and into the future"

    Well, next week qualifies as "into the future", doesn't it?

  48. Old Painless

    I have it on good authority...

    ..that Microsoft are buying Woolworths next - keep it under your hat

  49. dssf



    Maybe he has a hankerin' to do some more jumpin'?

  50. json

    Steve B.: Head-In-Sand Chief

    ..good luck steve! telecom companies worldwide are seeing dropping 'voice' calls and plateauing SMS revenues and while skype calls might be growing its not growing as fast as the alternatives ie email, social networks etc. I wont be surprised if in a few years we'll see companies with absolutely no phone number listed.

    beer.. to toast the band of money men laughing their way to the bank with Bill and Steve's money!

  51. Magnus_Pym

    It's got to be about the IP hasn't it?

    See title.

    1. dssf

      About IP?

      You probably are very correct. They can bludgeon ANYone whose implementations are perilously close to Skype's. Then, ms can screw those companies out of royalties, or sue/litigate them to death, or merely publicly threaten them so that investors of those targets withdraw future funding, just like ms' 1990s vaporware or delayware tactics.

      1. M Gale

        Not just 1990s

        Wonder how far that "settlement" of Novell's pushed them into the red?

        While Matt Asay might like to troll on about Microsoft being "more open than Google", the facts speak very very differently. At least Android 3.0 WILL be opened up when it's ready to be. I don't think the EFF have infinite patience with GPL software in that regard. Can you say the same of Windows, or of anything that Microsoft do?

        The only time I've seen Microsoft release genuinely free open-source software is when they were forced to by a court after being found out to be using someone else's intellectual property with cavalier disregard for the licensing terms. No, not just threatened in vague terms by someone who wouldn't even tell them where they were violating. They were caught with their hands in the till, cookie jar, with their pants down and very red faced, however you'd like to paint it. Even then they managed to paint it as a public gesture of friendship towards the "open source community", whatever that means.

        Oh how ironic.

  52. P. Lee
    Gates Horns

    Communicator replacement?

    How about selling private skype clouds or webex-type services? Skype's reasonably reliable and has an easy client setup. See how much a video conference hardware + software system costs and then tell me there's no money it! They could do a sort of "google mail for business" thing with a private grouping hosted on an external cloud. All you need is to open a couple of firewall ports and all your internal pc's get an internal voip capability via your exchange/AD server.

    Then there's the IP. Maybe they want to integrate proprietary things into WinMoPho so that when you walk into the office you pick up your AD assigned deskphone number to your mobile.

    Have you ever seen the price tag on a cisco ip phone? You could get two pc's for that. They've admitted Windows on ARM, how about getting a slice of all that deskphone business by wrapping it all into AD?

    How about voip based on email addresses? If Exchange does that, there are lots of companies using exchange who could turn that feature on in a later release. With a large potential user base (via exchange, not skype), it might be a reason to stick with exchange/windows rather than a unix mail system. A private skype/pstn gateway (exchange? communicator?) could try dialing free skype addresses and fall back to pstn if that fails.

    If you aren't concentrating on pushing skype to price-sensitive end-users, there are possibilities out there.

    But 8bn? Barking!

    Cue google voice going international.... because they can and it makes life fun for their staff :)

  53. Farmer Hackit
    Gates Horns

    Quite worried about this TBH

    I use Skype everyday to work with my Team in the states in order to run a business.

    I use all of its features. Text messaging, Regular calls, Video calls, Screen sharing, Skype numbers, Calling US landlines.. everything - on a Mac, on Windows and on several Android devices. I pay, but on the whole, it's very reasonable.

    While Microsoft appears to have been better behaved of late, I'm worried that they're going to pull the rug on this awesome product or change it to make it something that it's not. Or force changes in how I use it. Basically, they're gonna mess me about, reduce my options and charge me more for it.

    I'm perhaps reacting in a knee-jerky kind-of way but I wonder how long the good times will last?..

  54. Fatman

    Microshaft buys Skype

    Pressed, Ballmer responded: "I said it and I mean it."

    If you go by their past well deserved reputation of "embrace, extend and extinguish"; do not believe a fscking word Ballmer says.

    Give it 18 to 24 months, and only Windows will be a supported O/S. Skype users, who ran away from anything Microsoft, the time to jump ship IS NOW.

  55. Rex Alfie Lee

    Use Pidgin instead...

    Pidgin is already ahead of skype in combining various accounts such as Gmail, Yahoo, ICQ, MS Messenger & others a well.

    You can chat with these different accounts within Pidgin, something skype doesn't do. Pidgin is currently being ported to Android & runs on Linux, Windows & Apple. I guess someday iPhone may be ported too but I'd expect that to happen only after it is stable on Android...

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