Skype and Microsoft integration and business impact

Skype and Microsoft

During May 2011, Skype Global announced that it was to acquire the Internet communications company Skype. The deal would be concluded for $8.5 billion in cash. The investor group led by Silver Lake would be responsible for the purchase. The deal was approved by the boards of directors for both companies, Microsoft and Skype.

The main reason for the acquisition is that it would create benefits for both business and consumers. For customers, accessibility will improve, where video and voice communications will be easier and faster to use. This would bring new business and employment opportunities for people who use this technology. For Skype, its brand would be extended, with more people being able to access it and getting to know the brand. For Microsoft, the benefit would be that its products and services would be extended.

Both Skype and Microsoft have a significant reach for its existing markets, which the acquisition is expected to enhance. In 2010, Skype had 170 million connected users with 207 billion minutes of voice and video conversations. Microsoft has also focused on real-time communications, such as Lync, Outlook, Messenger, Hotmail and Xbox LIVE.

When the two companies work together, expectations are that Skype will be able to support Microsoft's Xbox and Kinect, Windows Phone, as well as other Windows devices. Skype users will be connected with Lync, Outlook, Xbox Live, and others. Skype clients on other platforms will also continue to be supported by Microsoft. After the acquisition, Skype would become one of Microsoft's business divisions, while the CEO for Skype, Tony Bates, would become the president of the Microsoft Skype Division.

Skype's purpose has always been to break down communication barriers. For this reason, the company created an online platform by means of which family, friends and colleagues would be able to use messaging, voice and video to communicate. Skype also made low-cost calls available at a low cost for landlines and mobiles practically across the world. Recently, Skype also created a platform for group video, where groups of more than two people could meet with Skype. The company was founded in 2003, with its headquarters in Luxembourg. It is available for free download. Microsoft was founded in 1975 and has since become the world leader in software, services, and solutions for businesses and individual people. It is expected that the acquisition would help both companies to expand their services for the benefit of customers, while also benefiting themselves by expanding their reach across the world.

The potential success of the acquisition depends on a number of uncertainties. The change to cloud-based computing, for example, could result in increased competition. Microsoft's business model may need to change. The company may also face challenges when protecting its property rights or when others claim that Microsoft has violated their property rights. Microsoft could also have security vulnerabilities that could result in a reduction of its revenue.