back to article Gates defends Ballmer's Skype gamble

Somebody big has come to the defense of Steve Ballmer's $8.5bn purchase of web telco Skype - the biggest deal in Microsoft's history. Bill Gates – Ballmer's colleague and long-time friend – apparently urged fellow board members to support Microsoft's move for the ex-eBay loss maker. "I was a strong proponent at the board level …


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  1. Jolyon Smith

    Point of order m'lud...

    "Gates' comments reveal the seven other board members were not behind the deal."

    Um, no. The article you linked to says no such thing. All it tells us is that Gates himself was in favour of the deal... it tells us NOTHING about how the rest of the board felt about it, nor that Ballmer was unable to convince the board without Bill's help.

    Now it may be that the fact that Mr Bill "The Internet is Irrelevant" Gates was in favour of the deal is not exactly cause for confidence in the decision, but there's no need to paint the facts in a curious shade of fiction/speculation to get this point across.

    1. Anonymous Coward
      Anonymous Coward


      Bill may have once, a long time ago, said something akin to "The Internet is irrelevant", he is pretty open about the fact that MS initially missed the boat on Internet, thinking that the private networks like AOL et al would be the way forward. However he and MS did get seriously behind Internet as soon as they realised, there was a fairly famous memo he sent to everyone in MS that said something like "We've got only one priority and that is the Internet."

      1. SuperTim

        and all with only 640K memory...

        because that's all we'll ever need.

        Yes, ol' Billy certainly has come out with some classics.

        1. Tom 13

          I think the memory requirement was

          from IBM, not Gates. Gates has created enough of his own baggage as a result of stupid mistakes without saddling him with one from IBM.

  2. Mikel

    Steve will need more help with the next one

    The board is starting to figure out the plot.

    1. dssf

      He should not have bought it with ms' money.

      He could have bought it with his own net worth and then if the Board wanted it instead, he could have marked up the price and sold it or licensed it. Then HE would have been sitting on BOTH boards, lol!

      Is that legal, or is it fraught with conflict of interest?

  3. Anonymous Coward


    When non-techies buy tech companies, the result is always "not great"... especially when it comes to the evil genius owners of Skype, brilliant scam artists who not only managed to write a great program, but sell it for maximum profit... twice!

    1. David Dawson

      Dum de dum

      There was me thinking that Microsoft is the biggest tech company of them all... oh well!

  4. Anonymous Coward
    Anonymous Coward

    So ,

    Skype - Ballmer's nemesis?

  5. A Non e-mouse Silver badge


    And still no-one can understand why Microsoft have bought Skype

    1. Little Poppet
      Thumb Up


      I think a major reason was to gain a huge user-base overnight - Which makes sense. Obviously M$ can do as they want with the 'tech' they just bought aswell.

      The overall plan is to integrate their gaming, mobile and desktop products. Very ambitious, something Google or Apple cannot compete with.

      1. L1feless


        What about GTalk, gmail and Google apps? All thee have been integrated for years and in the past year Google Voice has been added to Gtalk. So again....How can Google not compete? Now I will be realistic and say Google apps needs to catch up quickly to Ms Office to be taken seriously but the natural integration from day one with editing a document and chat and collaboration from within Google has been stellar. MS is wanting to offer a similar service to Google with their acquisition of Skype. I can also see it playing a major role in MS Lync. Now if Google was smart they'd acquire Maestro Conferencing and really start competing on web/video conferencing on a larger scale. It is a great little start-up and has some big potential.

    2. Peter Simpson 1

      Why Microsoft bought Skype?

      Because NetMeeting never worked worth s#!t and people keep asking MS why, as the #1 business desktop software provider, they don't have a decent conferencing app.

      1. L1feless


        very well said.

  6. Kevin Fields
    Thumb Up

    Not that big a deal

    Granted Microsoft paid 2x-4x the price that Skype was valued at, but to be honest Skype is an undervalued product. Skype closed their losses from $410 million to $7 million in one year, and that's with bumbling eBay at the helm. Skype partnered with a company that at least understands VOIP, networking, communications and advertising? Skype will turn a profit on it's first year under Microsoft, cut expenses and boost revenues.

  7. Goat Jam
    Paris Hilton

    a great, great deal for Skype, a great deal for Microsoft

    So, Skype got twice as good a deal?

  8. Michael 36


    M$ already have a chat application. Why buy another? It's a bit like having two solitaire sets. Am I missing something?

    1. Kevin Fields

      Think wider.

      As far as the software goes, Skype is not only better software than Live Messenger, it also have a wider platform. it also brings in not only a huge chunk of users who can be advertised to, but a huge chunk of PAYING users who spring for additional services.

    2. dssf

      Two solitaire sets? Ever played PySol?

      That depends on which set the users like. I loathe ms' solitaire offering. It is ruthlessly mean to me. I tend to lose a HECK of a lot more on windows solitaire and came to passionately HATE the thing. I haven't played it since maybe 1997. Found PySol on Mandrake, and loved it ever since. Then in or around 1999, PySol on picked up some cool German mixes/tracks. Those 3 or 4 tunes are hellaciously kewl and addictive. Even without the music, though, I tended to wind more or lose less in Mandrake/Mandriva/PCLOS and could even restart the game to teach myself to be more attentive.

  9. Code Monkey


    I just dowloaded it from their website. For free. Silly, silly Ballmer.

  10. Richard Jukes

    No idiot

    Bill is no idiot, he is indeed a ruthless and very good business chappy, there is a grander scheme behind all this.

  11. Anonymous Coward
    Anonymous Coward

    Revenue model?

    How about tying OCS (Mainly internal business use) with Skype (mainly external potential business customers).


  12. Eponymous Cowherd

    What else was he going to say?

    Gates:"I think it's a great, great deal for Skype. I think it's a great deal for Microsoft,"

    Well, he was hardly going to say "I think Ballmer's fucked up again", which, given Ballmer's track record, is probably closer to the truth.

    1. Anonymous Coward
      Anonymous Coward


      If Balmer keeps fucking up, as you say, why haven't the shareholders had him removed?

      1. Eponymous Cowherd


        because of his large stock of office furniture.

        1. hplasm

          He is-

          The Chairman...

        2. Peter Simpson 1


          "...large *arsenal* of office furniture."

  13. whats the point of kenny lynch?

    "a fair bit of revenue."

    did he really say that?

    if so, that's gotta be gag of the week.....

    1. Tom 13

      It does have a fair bit of revenue,

      it's just that at the moment it has a fair bit more in the expenses column. Bill didn't say nuttin' about profits.

  14. Tom 7

    Well he wont want to short his own shares in windows.


  15. Anonymous Coward

    Only Bill wanted it? Really?

    I see nothing in what Bill has said to suggest that he was the only one who wanted it. He just said that "I was a strong proponent at the board level for the deal being done". There may have been others, there may not have been. But to state "Gates' comments reveal the seven other board members were not behind the deal" doesn't seem to match what the BBC (which appears to be the source of this article) released.

  16. Graham 25

    Now the NSA will be listening in .....

    So once Skype is MS owned and US controlled, all the security goes out the window as the US government forces MS to hand over the security keys so it can listen in on calls?

    Maybe thats the logic behind the purchase - US State Department tells MS to buy it in return for going easy on it in other areas ?

    Bang goes any chance of a private conversation without the US listening in.

    1. Anonymous Coward
      Anonymous Coward


      That's some powerful conspiracy you've got going on there...

      1. Oninoshiko
        Big Brother

        and a odd conspiracy at that.

        Skype is being bought from eBay, who is also a US company. Why exactly is MS part of the conspiracy and eBay isn't?

  17. Anonymous Coward

    No it wasn't

    You could have built something for less, then given it away with the next version of windows.

    1. Anonymous Coward
      Anonymous Coward

      That's just it.

      Microsoft couldn't have built something for less. All they've ever done is bought (or stolen) things from other people and bolted them into Microsoft products.

  18. Anonymous Coward
    Anonymous Coward

    While we're here...

    ... shouldn't we remember MS's original foray into internet video calling - NetMeeting.

    I was involved in videoconferencing back in the days of CUSeeMe, and it was immediately obvious what people would do with the technology if unchecked - send pictures of their genitalia to each other. Therefore, to make it viable, you needed either accountability (i.e. traceable identification of the user) or blocking (i.e. prevent the flashers from connecting with you), and preferably both. NetMeeting provided neither, and became rapidly unusable as the willy-watchers filled it up and MS sat there claiming it wasn't their problem.

    MS's solution was very creepy. They killed the product... but they didn't. They never announced they had stopped supporting it. They just started to pretend it didn't exist, and had never existed, as all references to it dropped off the MS-owned parts of the internet. It was, like Comrade Hwang-Jang Yop, quietly airbrushed out of history.

    Back then, this was just another example of how MS had failed to understand the internet. What evidence do we have that they understand it any better now?

    1. OffBeatMammal

      NetMeeting and Three

      even sadder was the ability - even back then - to use a Three 3G mobile (in Australia at least) to call a NetMeeting user and video chat. I used to use it to talk to my daughter when I was on site long before Skype was an option

  19. P. Lee

    how about skype replacing ocs?

    and integrating with exchange. Corporates now get voip & video calling built into outlook.

    Internal voip & video conferencing comes built in. ARM-based windows os video phones puts it on every desk or on a pc. Get a slice of that oh-so-lucrative ip phone market.

    Click here to enable exchange-to-exchange skype calls based on skype username=exchange email address for intercorporate communications, all with exchange server acting as skype gateway & possibly pstn connection.

    All this is paid-for facilities - no freebie stuff here.

    Maybe even get a little skype-out revenue too. Look Ma, no pstn phone system required if I have exchange!

    It's robust and might be a compelling reason to put in or keep exchange. It would help start SMBs off on the MS road.

    Sure, you could do it for free, but then there's no corporate control & management.

  20. ThatGuyCalledPete

    MS bought a more mature "Facetime"

    Apple have launched FaceTime on the iPhone and iPad, and people are actually starting to use mobile tech to speak to each other face to face. However, if you want to speak to someone via FaceTime, then you'd better hope they have an iProduct.

    To compete with this, just launch with something similar, but with a much wider and unrestricted userbase...such as Skype.

    I am convinced Skype will be integral to Windows phone OS in the near future.

    Also Skype telephone could be sold better, there is a lot of potential - I personally use a Skype phone (wireless handset with a base unit plugged into my router) at home as my landline, with localised numbers in the UK and another major country for people to dial to reach me. Calls automatically forward to my mobile if I don't answer at home within some seconds (or immediately if I sign-in to Skype on my mobile phone). I enjoy cheap international calls at any time, it's perfect for anyone living abroad, or anyone who travels a lot, and wants to take their number with them. It's a lot more than an IM client with a cam.

    -- Pete.

  21. trafalgar
    Thumb Down

    Any program can do it

    The future is IP, and any app to any app, like email.

    If I want to do voice/video/im chat, I should be able to use any app I like and I pay for bandwidth to my ISP. What is the point of skype then?

  22. Anonymous Coward

    The *real* reason Billg is in favour:

    A bad Skype connection is the only thing that can make normal people sound as much like Kermit the frog as he does! Once Skype has replaced phones, he won't stand out by sounding so weird any more!

  23. Spicy McMarsbar

    Platform support gone?

    Does this mean no more Skype for Android/Linux?

    On another note, maybe MS heard about the major Skype security cock-up on Android phones and thought Skype would fit right in with them.


  24. Anonymous Coward

    Missing the point

    What I seem unable to find in any of my predecessors' comments is the word "patent". Skype own several of them. Now Microsoft own them too and can integrate them with MSN, Lync/OCS, Exchange etc. At the very least it takes away one large competitor to Lync/OCS/MSN.

  25. NoneSuch Silver badge


    "According to Gates, video conferencing is going to get a lot better than it is today, while Skype pulls in "a fair bit of revenue." Skype reported a $7m loss in 2010, compared to a $418m loss the year before."

    Nuff said.

    "Gates' comments reveal the seven other board members were not behind the deal."

    ...and there are only nine Board members total. Gawd I love that. Solidarity at the board level.

  26. json

    Bill Gates: "2 Great deals for Skype, 1 Great deal for MS" a bad deal. This is a very expensive buy out for what basically amounts to a user-base buyout (MS certainly has the technology to do something similar) . yes they're buying a lot of free loaders (me included).. and we're a very loyal bunch.

    As one of the millions of 'active' skype users listed in the buyout briefing papers... the reason why I still have my skype account is because in the oft chance that I need to use it for a 'formal' telecon with partners (so far we're perfectly happy piddling with email and chat -- couldnt remember when I last used skype) and second I'm too lazy to do any uninstalls or unregisters anywhere.

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