According to The Wall Street Journal and GigaOM late Monday night, Microsoft is on the verge of closing a deal with Skype worth $8.5 billion. An official announcement was given by way of a press release early this morning.
Skype is a Voice over Internet Protocol (VoIP) service founded in 2003 by Niklas Zennstrom and Janus Friis. Unlike other VOIP services, Skype is based on a peer-to-peer (P2P) network system, relying on borrowed processor cycles on customer's machines referred to as supernodes. Telecommunications companies, including mobile carriers, have long viewed Skype as a serious threat. The service allows consumers to make free computer to computer audio and video calls over the Internet to any location in the world that provides an Internet connection. Skype also allows file transfers, chat and instant messaging (IM) features. For calls to or from landlines, users must purchase the SkypeIn or SkypeOut services for very low annual fees, or purchase Skype credits at extremely low rates. This not only makes Skype useful to every day consumers, but it also provides a means of communication between US service men and their families back home. It has also provided a successful business model for popular podcasters like Leo Laporte. Leo's widely popular TWiT Netcast Network uses Skype to interview guests and feature guest hosts from all around the world simultaneously with the included conference calling feature.
Even with such great value, Skype has been struggling in recent years to turn a profit. According to earlier reports, Facebook, Cisco and Google were all rumored to be considering a bid for the company. Microsoft's successful acquisition of Skype could be one of the best moves the software giant has made in over a decade. While the world is going crazy over smartphones and tablets, Microsoft has largely faded into the background without a real presence in those markets. Windows Phone 7 is a big improvement over their previous Windows Mobile offerings, but Skype had previously reported that it would not support the platform. Obviously, that will no longer be the case. A Windows Phone 7 device with good quality hardware and Skype built right in would definitely be considered a serious contender to the dominant Android and iOS devices. If done right, Google Voice and FaceTime will be heavily pressured to improve on their current services.
Skype would also make a great addition to the Microsoft Office Suite, going far beyond the reliability and capability of Windows Live Messenger. The ability to quickly make a VOIP audio or video call with a client or colleague from Outlook, or even PowerPoint, Excel, Word or Project would be a great feature for corporate users, further increasing productivity and encouraging collaboration. Or, Skype could even be integrated into Windows itself, making it available to all users of the operating system that still holds the dominant market share. Best of all for Microsoft, Skype has over 660 million registered users that Microsoft can port over to Windows Live, Dropbox and other Microsoft services and products.
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