When Microsoft almost bought Yahoo, I yawned. When they signed the exclusivity deal with Nokia for Windows Phone 7, I laughed. But now that they are nearing a deal to buy Skype, they have my full attention!
Google and Facebook must by crying in their pillow. With this purchase, Microsoft has purchased a social network, a telco, and a money-printing machine.
Skype the Social Network
People don’t speak of Skype in the same breath as Facebook or Twitter, but perhaps they should. Skype is not just a social network, it’s a damn lucrative one. As users communicate with each other via instant messaging, conference calls, and video chat, they do while spending real world currency.
Skype the Telco
AT&T recently bought T-Mobile for $49 billion. And while Skype, strictly speaking is nowhere in the same league as either of them, it has one advantage. Namely, it is a telephone provider that can work over any carrier’s data pipes.
Are you almost out of cell phone minutes? Do you have 6GB of bandwidth to spend? Here’s a chance to bypass obscene voice overage rates.
Oh hey, did I mention Skype works on all carriers and smartphone operating systems? What a great way for Microsoft to find a presence everywhere.
Skype the Money Printing Machine
Yes, Skype has produced little net profit for the eight years of its existence. Last year, it posted a loss of $7 million on revenue of $860 million. Don’t let that fool you.
Telephony is a multi-trillion dollar business, and Carlos Slim, the richest man in the world, has made his fortune on it. VoIP (a.k.a., “Voice Over Internet”) is a microscopic fraction of it, but traditional telephone providers have had over a century to develop their business. Skype, by contrast, has had lass than a decade to go at it.
Once VoIP is further finetuned as a legitimate alternative to traditional telephony, Skype will become the equivalent of a money-printing machine. In fact, since it is the only VoIP firm in mass usage, perhaps this day will come very soon.
And with $8 billion, Microsoft will have made its most lucrative and strategic purchase in its history.
Microsoft in talks with Skype – Purchase or Partner? (winextra.com)
Skype rumored making deal with Microsoft (electronista.com)