Why Microsoft’s Buyout of Skype Changes the Mobile Game

Skype Technologies S.A. logo

Image via Wikipedia

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 2.2, running on a Windows Mobile 6 device

Image via Wikipedia

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.

There were 663 million Skype accounts in 2009. By contrast, Facebook reached a 500 million in 2010. Skype might not have the hype, but it definitely has the numbers.

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.


Image by Duane Storey via Flickr

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.

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One response to “Why Microsoft’s Buyout of Skype Changes the Mobile Game

  1. This is the kind of blog post that reminds that the ‘blog’ (a bad word amongst the neophytes) is the ‘lost’ art during the social media/web 2.0 😉 storm that we currently live in.

    It is the lost art and we do need to blog more, especially me. Ok I am going to write a few posts.


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