Microsoft confirms purchase of Skype for $8.5 billion

By Tom Warren, on 10th May 11 12:10 pm with 37 Comments

Microsoft Skype deal

Microsoft announced on Tuesday the acquisition of Skype.

The software giant announced the deal on Tuesday, valued at $8.5 billion cash. Both Skype and Microsoft’s board of directors have approved the deal and Microsoft will create a new business division especially for Skype. Skype CEO Tony Bates will assume the title of president of the Microsoft Skype Division, reporting directly to Ballmer.

“Skype is a phenomenal service that is loved by millions of people around the world,” said Microsoft CEO Steve Ballmer. “Together we will create the future of real-time communications so people can easily stay connected to family, friends, clients and colleagues anywhere in the world.”

Microsoft says Skype will support Microsoft devices like Xbox and Kinect, Windows Phone and a wide array of Windows devices, and Microsoft will connect Skype users with Lync, Outlook, Xbox Live and other communities. Microsoft will continue to invest in and support Skype clients on non-Microsoft platforms. “Tony Bates has a great track record as a leader and will strengthen the Microsoft management team. I’m looking forward to Skype’s talented global workforce bringing its insights, ideas and experience to Microsoft,” Ballmer said.

Skype currently has 170 million connected users and saw over 207 billion minutes of voice and video conversations in 2010 alone. Microsoft’s promise for Windows Phone, Xbox and Kinect Skype integration confirms that the company will look to use Skype broadly across its products. Skype was originally founded in 2003 and acquired by eBay in September 2005. An investment group led by Silver Lake acquired Skype in 2009. Speaking on behalf of the investor group that sold Skype to Microsoft, Egon Durban, managing director of Silver Lake, said: “We are thrilled with Skype’s transformation during the period of our ownership and grateful for the extraordinary commitment of its management team and employees. We are excited about Skype’s long-term future with Microsoft, as it is poised to become one of the world’s most dynamic and comprehensive communications platforms.”

  • http://unhub.com/eingoluq Eingoluq

    That image is golden.
    Lets see what advantages are in store.

  • http://profiles.google.com/negahi.mahdi Mahdi Negahi

    Niceeeeeeeeeeeeeeeeeeeeeeeeeee

    • http://www.Nave360.com Sebastian Gorgon

      Yup, i see good things coming out from this, Like Skype for Kinect on Xbox

    • http://www.Nave360.com Sebastian Gorgon

      Yup, i see good things coming out from this, Like Skype for Kinect on Xbox

    • http://www.Nave360.com Sebastian Gorgon

      Yup, i see good things coming out from this, Like Skype for Kinect on Xbox

  • http://twitter.com/dgwelsh David Garnett Welsh

    I like how the press statement says that it will continue investment in non-Microsoft platforms. I hope they sort out the UI of Skype, atm it’s a right mess.

    • Guru

      Metrofied Skype…………………………….

    • http://twitter.com/pabobo92 Panagiotis Bobolakis

      Metrofied Skype UI on Mac OS and Linux… Idk if it´s the right way. Sure, it would be nice somehow, i guess.

    • Frylockns86

      Agreed.

  • Anonymous

    Omg this can become a huge success

  • http://twitter.com/Mitchell90 Greig Mitchell

    A good move in my opinion, let’s see where Microsoft go with this.

    Oh…nice image Tom lol

  • http://barrymoves.blogspot.com/ barrymoves

    Worst kept secret announced. Good deal. Good for Skype. Definitely good for MS and Windows Phone :)

  • http://twitter.com/kenobeano Keno Butler

    Noice!!!

  • Chj

    RIP Skype

    • http://www.facebook.com/GriffinCoulter Griffin Coulter

      do not fret. this will only make skype better. hotmail/msn has gotten a hell of a lot better since its acquisition many years ago. i think this will be similar.

      this might be trivial, but picture skype on pc with metro design. i’m drooling at the thought.

  • http://twitter.com/s_a_r_k_i_s sarkis chamelian

    in the wise words of RYU ::::::: Shoryuken !!!

  • ss

    Facetime Schmacetime – This is big. Apple/Google pwnd.

  • Major Plonquer

    With Skype on Android maybe Microsoft will make more money out of Android than Google will. Specially if Google have to pay a per unit Android license fee to Oracle.

  • Major Plonquer

    With Skype on Android maybe Microsoft will make more money out of Android than Google will. Specially if Google have to pay a per unit Android license fee to Oracle.

  • http://twitter.com/efjay01 Ef Jay

    Not worth $8 Billion.

    • Mark

      I agree. That’s a very rich valuation for a company that is losing money. I don’t see the business logic here. Apparently the market doesn’t either. Did MS just pay up to keep Google from getting it?

    • http://www.facebook.com/GriffinCoulter Griffin Coulter

      Microsoft outbid both Facebook and Google (obviously) so in a way a suppose they did, but no. Lync and Live Messenger are messaging clients not VoIP. I think its a huge overpayment. Microsoft could have easily spent much less to develop their own VoIP client integrated into Live Messenger or Lync, but it think they did it more for the brand itself and the customer base it brings with it. 400 million + Skype users i’ve heard. thats pretty could publicity for Microsoft.

    • Mark

      Messenger includes VOIP, it just hasn’t been successful.

  • http://adamhaider.com Adam Haider

    Microsoft has always been known for it’s large scale acquisitions; mostly focusing on business, web and server-side technologies, but this time I can see a real positive impact from this in regards to their consumer aspirations on competing with Apple. Personally, I think Face-time offers very little in terms of functionality so with the help of Microsoft’s Kinect technology and their (social/entertainment/business) ecosystem they can really offer something totally unique and unmatched. — It’s really obvious now that Microsoft is in this for the long-term and are not backing down, I just hope they improve their internal management and PR issues so they can provide the public with a brand they can finally be open in appreciating and recommending.

  • Joe

    Nice move MSFT. Wait until skype is integrated into the next version of windows — plus xbox, and windows phone. This will change the dynamics of the telco industry. Way to go!

  • Fred

    Now MSFT needs to fix their advertising….why didn’t Microsoft do this video….very inspirational.
    http://www.youtube.com/watch?v=6Cf7IL_eZ38

  • Calum

    I do wish they would just integrate all Skype services and features into Windows Live Messenger and transfer those users over, but I know they wouldn’t :/

    If they brand Skype as a Microsoft product and design its interface in a Metro style, I’ll be happy, but I’d like them to give Skype more of a Microsoft identity.

    • Mark

      If they brand Skype as a MS product they lose most of the money they just invested. As Griffin said above, they’re mostly paying for the brand and the installed base. If you screw with the brand, you risk losing the users. Especially when there are alternatives from both Google and Apple.

  • Jhonny Lopez

    Reading news about that in the web showed me the irrational hate on Microsoft. It is getting worst.

    • zzz

      Yes, there are a lot of crazy haters out there. Whenever MS makes a move, they come out and show us how much they’ve been brainwashed by Apple and Google’s marketing machine. Stupid and getting tired really.

    • zzz

      Yes, there are a lot of crazy haters out there. Whenever MS makes a move, they come out and show us how much they’ve been brainwashed by Apple and Google’s marketing machine. Stupid and getting tired really.

  • http://profiles.google.com/lerimer Lerimer Santana

    This is huge, microsoft own “Facetime”!!!!!

  • anonymuos

    They will probably put a Ribbon on it, make it Windows 7 exclusive on Windows platforms, cut existing features and force client upgrades like they do for Windows live messenger.

    • http://www.facebook.com/GriffinCoulter Griffin Coulter

      is there a ribbon in wlm? no. they only use the ribbon for productivity like office. (ie. email, word) i think they will extend the metro ui to it, which would look awesome. much like what was previewed at mix for skype on wp7. and no. since hotmail/msn got acquired years ago, they’ve only added features.

      and they will NEVER restrict it to wp7 and windows 7 exclusively. more people using the software = more money. they wont restrict just so people use their products. skype doesn’t have that much pull. (in other words people wont switch to wp7 or windows 7 just for skype)

    • Anonymous

      maybe you should watch the webcast about what Ste and skype guy said?…. but what can be expected from a “anonymous” who comes and just trolls… who doesnt seem to know much.

  • http://www.facebook.com/GriffinCoulter Griffin Coulter

    i do agree with most people that say its an overpayment, but microsoft does have roughly 50 billion in cash. so spending 8.5 billion on skype really isnt that big of a deal. also, this will be nothing, but good for msft. which it cost them less, but good move.

  • zzz

    Almost everyone said MS overbid Facebook when it was valued $16B couple years ago. FB is now worth $50B. Skype’s potential with MS’s backing is huge. I’d wait couple of years before judging this deal.