Hilariously unlikely, unless your definition of "a lot" is small enough to cover the more neckbeardy sorts in the Linux community and maybe a few ABMers.
Most people just don't care so long as the software works well. (Whether Skype does work well is debatable, but given its popularity, it seems to work better than the rest of the options available. EKIGA SOFTPHONE, EVERYONE!)
If this goes through, I wonder what would happen to Skype's Linux and Mac support. I'd hope MS would still support it, but I don't think they have any Linux software currently (I'm not positive about that, so please correct me if I'm wrong) and the Mac version of Office is always delayed compared to the Windows version. I hope Skype doesn't similarly languish.
Which is great. It does pretty much everything the Windows client does (chat, voice, video, desktop sharing), without the big, gaudy, annoying interface.
I fear that it'll just go away, or actively get shut down by compatibility changes.
(My friends and I practically live on Skype. The one killer feature for us is persistent chatrooms; it's like IRC, except when I log in I get all the missing chat history I didn't get while I was logged out.)
The linux client is missing a critical feature for me: joining an in-progress audio call. One call I'm in is almost always running, and the host is often not there to add me. I end up running windows skype in a VM when I'm on linux.
Yes, I found this very annoying. I remember the previous OSX version was also missing this and I often got laughed at because I couldn't join a call. Apparently this was Steve Jobs fault or something along those lines.
Skype is demonstrably worse on Linux. Aside from it's tendency to lock up, its support for conference calls is wrong; for example, if you're in a call, and call out to a phone number it offers to add the new call to the conference after you've made the request.
1) Four of those friends are not technical, and wouldn't know what to do with irssi. The remainder are using laptops that get disconnected a lot.
2) I reboot to Windows to play games. There goes the screen session.
3) Skype on iPhones. Seriously. I ain't screwing around with a phone keyboard and terminal app to SSH in, screen -dR and scroll around just to get back into a chat.
I don't use IRC for specific people, if specific people want to speak with me, they can be-bop into mumble, call my phone, IM me, visit me, email me...I'm just explaining why the rationale specific to IRC doesn't make much sense.
Yes. Instead of using the free app Skype, I should instead pay $20/month for a virtual server just so that I can have an always-on screen session with an IRC client running in it. Makes total sense.
We moved off Skype chat at our company partly due to the fact that the Linux client makes you keep a separate window open for every chat you're in, making it basically unusable beyond 5 or so chats. Throw in the fact that the usernames aren't color coded and you can't bump the font size and switching to IRC was a no-brainer.
One of Skype's major strengths is that you can use it to communicate with others regardless of operating system (for the most part... they don't have BeOS client, etc). Personally, I think there would be a large migration to something else if that changed:
1. Linux/Mac users would move because they had to.
2. Linux/Mac users that use Skype to communicate with long-distance friends and family would convince them to jump ship to another platform (if only to be able to do video conferencing).
3. People pissed off at MS would migrate on principle (though maybe only if there was a viable alternative to the way they currently use Skype).
There really isn't anything better on Linux, sadly. I wrote a longer comment about this a few days ago, but the gist is that Skype is the only semi-reliable video chat/SIP client for Linux, even factoring in serious neglect from Skype Inc. for the platform.
This acquisition probably is the final nail in the coffin for Skype's hypothetical open-source Linux client.
I don't have high hopes at all that alternate versions of Skype will be kept up very long. Everything Microsoft does eventually leads back to Windows or Office.
Can you clue me in? I just tried several a couple of weekends ago and it didn't work out. Twinkle was good but hasn't been updated for years and doesn't work with PulseAudio. Everything else barely ran.
Ekiga doesn't pick up the other end of the call for me when I tried it a few weeks ago (the person is there but no sound output from their side of the call). I actually used Ekiga extensively for a while (I even wrote a partial patch for GCC 4.4 compatibility, this was ~early 2008) and could eventually get it to work most of the time, but it frequently had problems; it would crash, drop sound, leave the device busy from the last call, etc. Lots of problems with it. Went back to Skype.
I tried Wengo (now QuteCom) and couldn't get it to pick up the sound device or something like that. Maybe another PA bug, but PA has been a default feature of Linux desktops for 3-4 years or more by now. I don't remember the exact issue I had with it.
Pidgin isn't made for SIP/VoIP applications but I still haven't ever been able to get the gstreamer connector to respond correctly. The only IM client with which I've had success using video chat is Empathy, but it had a few issues too with closing devices/picking up subsequent calls.
Maybe it's just because I use Arch, but Skype is the only mostly-reliable video conferencing/SIP-like app on Linux that has actually been usable for me.
Microsoft is actually not too bad at Mac support, their Office is usually one year later than the Windows version (Office 2011 vs 2010 for PC, all the way back to Office 98 for Mac vs 97 for PC). And then they make the Expression suite, Microsoft Messenger (Windows Live client), Silverlight and Windows Media components.
Maybe I've missed something, but what has changed in the two years since eBay spun off Skype at a valuation of < $3B to make it worth more than $7 billion today?
That, and ebay never figured out how to monetize it. MS likely has some plans in place to aggressively make money from it. I'm a skype subscriber, and probably will continue to be one, assuming they keep at least the same level of support for Macs.
Since the owners are almost all US-based (I think), fluctuation in the dollar against foreign markets shouldn't have much impact on Skype's pricing. Even so, the dollar's value against the Euro hasn't hardly changed at all: eBay announced their sale of Skype on September 1, when 1 USD = 0.7 EUR. Today. 1 USD = 0.6975 EUR.
I guess the sarcasm didn't come through - forgot my smiley face. Too many talk radio commercials telling me to buy gold were behind that knee-jerk observation.
I think the higher price is partially because MS may have a strong monetization plan in place and they don't want anyone else to get it.
> a group of technology investors including Silver Lake Partners, venture capital firms Index Ventures and Andreessen Horowitz, and the Canada Pension Plan Investment Board
"Since the owners are almost all US-based (I think), fluctuation in the dollar against foreign markets shouldn't have much impact on Skype's pricing."
Is not fluctuations against foreign market, inflation is rampant, that means that is something has the same value,(a company) you need to pay more dollars for it.
Dollar has gone down against commodities(sugar, rice, oil, gold, copper...) because FED is printing dollars like there is no tomorrow. Europe is doing the same for Euro(because if they do not Spain, Greece, Portugal and Ireland burn).
1) Skype has stronger growth than when it was owned by eBay
2) When it was spun off by eBay, Skype acquired the IP of their P2P technology from the founders. This makes it more attractive to suitors
3) Skype has filed for an IPO, which would give its valuation a premium
These are the reasons that make Skype more valuable now than when it was spun off by eBay. If you add a bidding war between Facebook, Google and Microsoft, it explains the $7 billion valuation.
However, I agree that $7B is too much for Skype, unless there are great synergies for the acquirer.
1. Since eBay sold its controlling stake (they still own an amount of equity in the business) the investors now in control have got the rights to the whole thing where eBay didn't actually buy the rights to some of the code off the founders - this makes quite a difference.
2. The western world is slowly pulling itself out of a recession right now, rather than two years ago when we were on the other side and already sliding down. This will help any good plan to monetise the service further if that is MS's goal (it is probably their secondary goal).
3. Social networking, while already the "big thing" two years ago has grown considerably and is a fertile battleground for the big names. Competing in this market is presumably MS's primary driver for the purchase.
4. Facebook were strongly rumoured to want Skype or something similar to integrate with its current offerings and Google already has Google Talk (though it only has a fraction of the market awareness of Skype). So for MS to compete in that area they would have two choices: put up a big enough offer for Skype to scupper anyone else (particularly facebook, because if they got it MS would be competing against two entrenched brands in the same beast) buying it, or make their own (or buy something else) and have to compete against the entrenched ubiquitous brand in the area (some people talk of making an Internet call as "skyping" someone).
The valuation seems quite a bit high to my untrained eye, but MS buying Skype makes sense and perhaps that is simply the price they had to pay to get it. It isn't like MS is short of a bob or two.
Maybe; eBay paid $2.6b in ~2005 (OP says 3.1b, WP says $2.6b), and then sold off 70% of it for $2b (http://en.wikipedia.org/wiki/Skype#History). OP doesn't seem to specify how much MS is buying, but let's assume 100%, so eBay is selling its 30% too; 30% of 8.5b is $2.55b, so eBay sold its 2 chunks for 2+2.55 or $4.55b.
That represents a profit of 1.45 or 1.95b over 6 years or $320m a year. (If MS didn't buy eBay's share, then they are currently at a 0.6-1.1b loss on their Skype investment excluding whatever that 30% is worth.) Presumably eBay had better opportunities for 2-3b of capital.
I wouldn't presume Ebay had better uses for the capital though. Skype has clearly had a faster rate of growth than Ebay. (although, paying an effing dividend would in my personal opinion be better than maintaining a thirty percent share of a telephone company)
TFA talks about how this "could play a role in Microsoft's effort to turnaround its fortunes in the mobile phone market".
Personally I feel this could be more about Microsoft strengthening its enterprise communications portfolio. Communicator/Lync is a giant turd, and this could be their play at Cisco's market, rather than Apple/Google's.
(Incidentally, the Skype chief exec Tony Bates is ex-Cisco)
I haven't tried Lync since it was re-branded from communicator. Communicator is very special in that it is one of the few teams that the 'Live' team could look down on.
I don't disagree with you as to what happened, but I'm genuinely curious as to why you think that Microsoft, Google and Facebook are all awful choices.
Google has no support, Facebook is staging a war against privacy, and Microsoft has some pretty meh software outside of Windows (when they bother to have any version at all).
I guess ultimately MS buying it was not the worst decision - a second-class client on non-Windows is better than Google not supporting it till the users give up and they can discontinue it, or Facebook defaulting to telling the whole frigging world every time you phone someone or sharing your Skype address with every scabby app developer out there.
But it was really a lame lineup to choose from. I don't know who I'd actually have liked to buy Skype, but not these three.
10 years ago, Microsoft was $35. Today it is $25 and change. Not very rewarding.
Microsoft is like the electric utility of the technology business -- they should embrace that or wake up and break up the company into manageable parts.
Buying Skype? That's not creating shareholder value.
There aren't many very large brand name "statement" acquisitions there. Most are small companies you've probably never heard of. I think this Skype acquisition is a clear message that Microsoft is playing hardball now.
It's funny that this comment is in response to someone suggesting a dividend, yet completely ignores the dividend in mentioning the stock price over time.
Is it better for shareholders to reinvest dividends from mature firms into growing firms, or for mature firms to continue investing in their own stalled growth?
That's a big if for them right now. When you're trading at a P/E in the single digits ex cash, the market is telling you they have no faith in your ability to re-invest your earnings(especially when interest rates are so low).
I'm going to play a little devils advocate here. What if MS payed a big enough dividend that it was clear to everyone inside that burning money playing catch up was not a viable strategy. Is it not possible that fewer extraneous resources would force them to refocus?
When we see the mac version stagnate, we won't be able to say MS has sabotaged it - skype did that before on their own.
The linux version has never been on parity with the others - will it be officially killed? Might MS actually put resources in to it to make it work as well as the others?
Overall, good on MS for doing this. I'm assuming this may bring on some more interesting dynamics to the google voice / skype party.
Not so fast. Have you seen the Bing and Microsoft research apps? Bing also is being used on Chinese versions of the Dell Android phones instead of Google.
Interestingly, if Microsoft does buy Skype and make it Windows only, they would be opening a huge door for GChat as [EDIT: the obvious] cross-platform client. FaceTime too, I guess, if Apple decides to move in that direction.
If Skype isn't the default, verbed, system, doesn't it lose some value?
GChat is already totally cross platform since it's just XMPP. There are tons of clients out there. You can run your own jabber server and connect to @gmail.com addresses, even.
On that node, didn’t Apple say, via Steve Jobs at the presentation where it was announced, that FaceTime was to become an open standard? What ever happened to that?
He did, but that’s the last we’ve heard of it as of yet [last I heard it discussed]. I doubt they killed it forever though, it’s not like Apple to make a false announcement (vaporware); it is like Apple to de-prioritize the speed of open sourcing that stack over developing/improving/iterating their own implementation and/or iOS ecosystem as a whole.
For what I understood, the protocols are open, but you can't join in the network without a private key signed by Apple :). It seems to use fairly standard protocols though: http://en.wikipedia.org/wiki/FaceTime#Standards
After acquisition, MS will put out a lot of PR saying that cross-platform is "very important" in this new acquisition, they will even release an updated version on cross-platform. ...of course that update will be screwed up as it has been "fixed" to make all versions more "windows friendly" at the expense of features that may be better on other platforms (i.e. scrap the Mac interface, kill open protocols, replace working code with .net tech, etc.).
Then after a few months of user complaints there will be MS's product performance review, since after alienating the Linux and Mac folk, they will declare there is no viable market for those platforms any more and close those divisions and thus drag it into the Windows only division.
Yep, I've been around for several of those (FoxBase/FoxPro, Bungie Games, Flight Simulator, etc. to just name a few) - if they were selling a shirt about it I'd have already worn it out.
Ironically, because of the European rulings we might see protocol specification for Skype - MS had to publish bunch of it's protocols after some European anti-monopoly deal.
I agree, but you forgot one thing they'll undoubtely do: they'll change the underlying protocol, so that existing Mac and Linux clients will not work with the Skype network anymore. http://en.wikipedia.org/wiki/Embrace,_extend_and_extinguish
I don't think MS has the market clout to pull that anymore. Maybe if they want to turn it into corporate IP telephone to compete with Cisco, but if they shut Mac users out they're just asking for immediate irrelevance among the home/hipster/startup crowd which will quickly anoint a successor.
> The linux version has never been on parity with the others
That may be true, but in my experience, I could barely get skype running on an old windows box: it would routinely grind the system to a halt. In 2010 I switched to that box to SuSE 11, where Skype, though a bear to set up, ran smoothly, with a non-noticable frame rate and better-than-TV graphics on old hardware (circa 2003 2GHz Dell with 1 GB RAM. It did that while providing NFS filesharing to another computer playing movies and a laptop playing audio.
The audio setup hassle had all the features of any other sound setup headache in Linux. I lay that problem squarely in the lap of the Linux sound community.
Interesting to note that the market cap of Vonage is only 1.04B. They might have been able to buy up every single other VOIP company on the planet with the remaining $6 Billion.
I'm sure integrating a truckload of companies all with wildly incompatible systems and personnel would work out more horribly then we could possibly imagine.
There is always a persistent threat of Apple bringing Facetime to the PC desktop so that people on iPhones could call people with PC.
By purchasing Skype, MS could bring Skype to WP7 and offer it preloaded.
There used to be a time when MS could get traction simply by bundling their product everywhere. A competitor like Skype would be abandoned simply because they couldn't outspend MS. Imagine, $7b is a lot of money. You can give away $1b of free calls to get Live Messenger kick started, or run Lync for free. MS has lost that swagger that used to create their own reality.
That's already happened. When Apple introduced Lion, one of the things they mentioned was they'd ported FaceTime to the Mac. You get it preloaded with a new Mac, or it's $0.99 in the Mac app store.
Mac is not a PC.
Apple will hesitate a long while before bringing Facetime to the PC, because Facetime promotes all-important lock-in to the Apple ecosystem and sells Apple hardware.
I will bet a bottle of single malt that Apple will bring FaceTime to the PC.
I agree that FaceTime sells Apple hardware, but I think the hardware they want to sell is the iOS product line. Weigh how many Mac sales the will lose if people can get FaceTime on a PC against how many iPhone and iPad sales they will make to people who can now chat with Grandma on her PC?
Ubiquity on the desktop and exclusivity on the mobile device are wins for FaceTime just as they are wins for iTunes.
You are quite right there. Windows environments are a haphazard mess of personal firewalls, routers. There is probably a reason why Jobs didn't want to go there.
Having said that, Skype showed that they could make it work.
Apple's valuation today is based on its growth trajectory. This means growing their customer base and engaging in hand-to-hand combat for existing PC users to move to the Apple platform. In some way, Apple's hands are forced.
Are we talking about the same company? The only time Apple ports their software to different environments is when they are in a position of weakness (like they were when they reluctantly put iTunes on Windows). I don't think a single Apple iOS app has made it's way to Android, or any new Mac software has been ported to Windows in recent years. You can accuse Microsoft of a lot of things, but they've always been willing to port their software when there is a buck to be made (they are a software company after all).
I personally see porting something like iWork very differently than porting FaceTime. If they think porting FaceTime will help sell iOS devices, I think Apple will do it for the same reason they ported iTunes. Whereas porting iWork doesn't do anything for selling iOS devices.
That being said, this is a guess and that's why I said I would bet on it. If I knew for sure, it would be unethical to bet on the outcome!
For any communication tool to be successful it has to be cross-platform. You aren't going to use an application if you can only talk to people who are running the same app on the same OS as you
That is why I agree that both Apple will eventually release FaceTime on Windows, and why Microsoft will do everything they can to keep Skype multiplatform
Skype is losing tons of money and needed to get out with whatever users it had. Microsoft can then sync this up with their own communication clients for a joint play.
I doubt it. I would hazard a guess that a this is a mindshare acquisition not technology. It might be branded as "Microsoft Skype" but to drop the name Skype would be a seriously stupid move, and Microsoft is anything but stupid. Bureaucratic yes, but not stupid.
A bit hyperbolic, but amusing. Why doesn't Microsoft adopt meaningful brands that aren't 4 words long (Microsoft Windows for Workgroups) or vapid and diluted (ie, live)?
Because it's so hard to come up with distinct unused names that work worldwide. Look at Apple, they aren't really any better (Thunderbolt, Air, Apple TV).
Microsoft owns the desktop - that's their cash cow. For large businesses they (basically) have to buy outlook / exchange. They throw powerpoint, visio, word, excel on top of that, plus the operating system, and they own it. From an operating system standpoint, there's not any real threat. From a productivity suites perspective, there's a bit more threat from cloud, but it's still comparatively small. Same can be said for email - gmail is a much larger threat but for corporate security, calendaring, integration, it's still not really there. This will probably be different in 5 years as the proprietary protocols and integrations move towards open standards. I find it ridiculous that I can't find another desktop email client that will natively work with exchange/MAPI, and Microsoft knows it. Skype is just extending it to the desktop, and it's a strong part of the desktop suite. I think they want to play in the enterprise space, because nobody wants to use Lync for anything other than IM (aforementioned turd comment here).
Far be it from me to hate on a FOSS project, but be aware that the Exchange support for Evolution has a reputation for off-and-on compatibility issues. (Microsoft likes to break things. Who knew?)
From what I've heard, it's not always plug-and-play to set up, either. (Calendaring support in particular.)
For a long, long time now, MS services (not directly tied to Hotmail itself) have required a Live account only, which can be created with any email address.
I have a feeling that Microsoft was suckered on this one. Google and Facebook probably had no interest in skype, but bid it up so Microsoft would have to pay more. You'd think after all these years, and having this same thing happen time after time that they'd know that trick and see it coming. Guess not.
I think Skype would have been more valuable to Google, than to Microsoft--imagine having a free Google Voice number linked to your Skype ID. I think Microsoft was willing to pay a $1-2 Billion premium to keep it from Google and maybe a bit more to be able to use it as a bargaining chip with Facebook in their (MSFT and Facebook) pseudo-alliance.
I get the sentiment, but do you really think a) that there are 200 worthwhile startups in the mobile space, or b) that there are 200 promising startups that you could acquire for an average of $350 million each that would have anywhere near the chance of establishing a network effect as big as Skype's in any kind of reasonable internet timeframe (say, in the next 5 years)?
Ackppttthtt, my fail. Still not a lot of $35 million exits, but significantly more of those than $350 million. The point still holds though--not sure there are 200 of those $35 million exits either. (Isn't that still almost twice the size of a CDBaby exit?)
Yeah but come on, CD Baby is a warehousing and fulfillment company with a niche market that basically gets paid by starry-eyed musicians to let CDs gather dust and paid again to encode their music and send it to iTunes. Some small fraction of the bands actually sold enough to restock inventory. That's not a recipe for high margin success.
a) Probably, though I bet I don't know most of them. If I were MS M&A I would bet disproportionately on mobile, though, because that's an area they need to nail if they want to stay relevant. If they could get 70 out of 200, that'd be a darn good start.
b) Individually, not terribly likely. Collectively? Sure. (And it's $35M each, but the exact number isn't the point - let's say you could offer every ycombinator and techstars startup an average of $35M each, you'd likely end up getting two or three Dropbox-esque gamechangers, a few dozen decent products, and 150 otherwise good ideas folded into MS and dead-ended.)
To the extent that my math was way wrong, I think your point carries more weight (meaning: you're an order of magnitude better than I thought). I'd say if they bought the top 10 mobile plays for $70 million each they'd have a much better expectation (assuming that the acquisitions could be digested--risk which itself carries a significant reduction in expected value).
I fail to see how this is a wise business decision. Skype has been losing money for a long time, and with cheap/free competition like Google video chat and FaceTime etc, why would MSFT invest in this?
I think you answered your own question: to compete with FaceTime and Google Voice. I think they're afraid to sit this race out the way they did mobile and get left behind again.
If Microsoft somehow owned both of those services, would it affect Microsoft's prospects? Certainly not. FaceTime is a gimmick that few people actually use use. Google Voice is bridge between soon-to-be legacy voicemail and cellphones and the future, which is unlikely to be owned by either Google or Microsoft. Neither business would help Microsoft grow again, and neither will Skype.
My friend who lives far away has an iPhone. I have a mac, we use it all the time. I actually hate using Skype because some clown has my username. We use Skype at work, but I never get entrenched in a service if I don't get my username. Just a singular of data for you.
I haven't met in the flesh anyone who uses it regularly, and I know a lot of iPhone 4 owners. I'm sure there are people who do. It would be interesting to get some real data. My impression is, as with every video chat service for 30 years, it has very limited use because people just don't want to video chat most of the time.
if MS absorbs the Skype technology into their own IM/chat/communications systems - and skype users are left out on a limb - where do they go?.
They stay with the MS product line happily perhaps, or they go to __________?
gChat/open/xmpp?
Jump all the way to Apple FaceTime (seems a far jump).
Or with forthcoming p2p flash video ease-of-dev/ease-of-use, does this all just become super common/easy to access?
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[ 3.2 ms ] story [ 266 ms ] threadMost people just don't care so long as the software works well. (Whether Skype does work well is debatable, but given its popularity, it seems to work better than the rest of the options available. EKIGA SOFTPHONE, EVERYONE!)
I fear that it'll just go away, or actively get shut down by compatibility changes.
(My friends and I practically live on Skype. The one killer feature for us is persistent chatrooms; it's like IRC, except when I log in I get all the missing chat history I didn't get while I was logged out.)
What?
screen + irssi + /lastlog your_nick
2) I reboot to Windows to play games. There goes the screen session.
3) Skype on iPhones. Seriously. I ain't screwing around with a phone keyboard and terminal app to SSH in, screen -dR and scroll around just to get back into a chat.
1. Linux/Mac users would move because they had to.
2. Linux/Mac users that use Skype to communicate with long-distance friends and family would convince them to jump ship to another platform (if only to be able to do video conferencing).
3. People pissed off at MS would migrate on principle (though maybe only if there was a viable alternative to the way they currently use Skype).
This acquisition probably is the final nail in the coffin for Skype's hypothetical open-source Linux client.
I don't have high hopes at all that alternate versions of Skype will be kept up very long. Everything Microsoft does eventually leads back to Windows or Office.
I tried Wengo (now QuteCom) and couldn't get it to pick up the sound device or something like that. Maybe another PA bug, but PA has been a default feature of Linux desktops for 3-4 years or more by now. I don't remember the exact issue I had with it.
Pidgin isn't made for SIP/VoIP applications but I still haven't ever been able to get the gstreamer connector to respond correctly. The only IM client with which I've had success using video chat is Empathy, but it had a few issues too with closing devices/picking up subsequent calls.
Maybe it's just because I use Arch, but Skype is the only mostly-reliable video conferencing/SIP-like app on Linux that has actually been usable for me.
Not by that much, but it's certainly changed.
That, and ebay never figured out how to monetize it. MS likely has some plans in place to aggressively make money from it. I'm a skype subscriber, and probably will continue to be one, assuming they keep at least the same level of support for Macs.
Since the owners are almost all US-based (I think), fluctuation in the dollar against foreign markets shouldn't have much impact on Skype's pricing. Even so, the dollar's value against the Euro hasn't hardly changed at all: eBay announced their sale of Skype on September 1, when 1 USD = 0.7 EUR. Today. 1 USD = 0.6975 EUR.
I think the higher price is partially because MS may have a strong monetization plan in place and they don't want anyone else to get it.
Is not fluctuations against foreign market, inflation is rampant, that means that is something has the same value,(a company) you need to pay more dollars for it.
Dollar has gone down against commodities(sugar, rice, oil, gold, copper...) because FED is printing dollars like there is no tomorrow. Europe is doing the same for Euro(because if they do not Spain, Greece, Portugal and Ireland burn).
Some ppl in and around ebay monetized the buying and the selling big big time.
http://skypenumerology.blogspot.com/2011/04/summer-recession...
2) When it was spun off by eBay, Skype acquired the IP of their P2P technology from the founders. This makes it more attractive to suitors
3) Skype has filed for an IPO, which would give its valuation a premium
These are the reasons that make Skype more valuable now than when it was spun off by eBay. If you add a bidding war between Facebook, Google and Microsoft, it explains the $7 billion valuation.
However, I agree that $7B is too much for Skype, unless there are great synergies for the acquirer.
2. The western world is slowly pulling itself out of a recession right now, rather than two years ago when we were on the other side and already sliding down. This will help any good plan to monetise the service further if that is MS's goal (it is probably their secondary goal).
3. Social networking, while already the "big thing" two years ago has grown considerably and is a fertile battleground for the big names. Competing in this market is presumably MS's primary driver for the purchase.
4. Facebook were strongly rumoured to want Skype or something similar to integrate with its current offerings and Google already has Google Talk (though it only has a fraction of the market awareness of Skype). So for MS to compete in that area they would have two choices: put up a big enough offer for Skype to scupper anyone else (particularly facebook, because if they got it MS would be competing against two entrenched brands in the same beast) buying it, or make their own (or buy something else) and have to compete against the entrenched ubiquitous brand in the area (some people talk of making an Internet call as "skyping" someone).
The valuation seems quite a bit high to my untrained eye, but MS buying Skype makes sense and perhaps that is simply the price they had to pay to get it. It isn't like MS is short of a bob or two.
That represents a profit of 1.45 or 1.95b over 6 years or $320m a year. (If MS didn't buy eBay's share, then they are currently at a 0.6-1.1b loss on their Skype investment excluding whatever that 30% is worth.) Presumably eBay had better opportunities for 2-3b of capital.
I wouldn't presume Ebay had better uses for the capital though. Skype has clearly had a faster rate of growth than Ebay. (although, paying an effing dividend would in my personal opinion be better than maintaining a thirty percent share of a telephone company)
Personally I feel this could be more about Microsoft strengthening its enterprise communications portfolio. Communicator/Lync is a giant turd, and this could be their play at Cisco's market, rather than Apple/Google's.
(Incidentally, the Skype chief exec Tony Bates is ex-Cisco)
http://about.skype.com/2009/11/joltid_settlement.html
"eBay Inc. and Silver Lake Investor Group Settle Skype Litigation with Joltid Limited"
I guess ultimately MS buying it was not the worst decision - a second-class client on non-Windows is better than Google not supporting it till the users give up and they can discontinue it, or Facebook defaulting to telling the whole frigging world every time you phone someone or sharing your Skype address with every scabby app developer out there.
But it was really a lame lineup to choose from. I don't know who I'd actually have liked to buy Skype, but not these three.
(sorry, punctuation nazi + Airplane reference temptation overwhelming)
I'll miss the Linux client when Microsoft kills it. :(
Microsoft is like the electric utility of the technology business -- they should embrace that or wake up and break up the company into manageable parts.
Buying Skype? That's not creating shareholder value.
There aren't many very large brand name "statement" acquisitions there. Most are small companies you've probably never heard of. I think this Skype acquisition is a clear message that Microsoft is playing hardball now.
1: http://www.microsoft.com/investor/InvestorServices/FAQ/defau...
That's a big if for them right now. When you're trading at a P/E in the single digits ex cash, the market is telling you they have no faith in your ability to re-invest your earnings(especially when interest rates are so low).
When we see the mac version stagnate, we won't be able to say MS has sabotaged it - skype did that before on their own.
The linux version has never been on parity with the others - will it be officially killed? Might MS actually put resources in to it to make it work as well as the others?
Overall, good on MS for doing this. I'm assuming this may bring on some more interesting dynamics to the google voice / skype party.
If Skype isn't the default, verbed, system, doesn't it lose some value?
The cloud is more important to MS than WP7 is.
After acquisition, MS will put out a lot of PR saying that cross-platform is "very important" in this new acquisition, they will even release an updated version on cross-platform. ...of course that update will be screwed up as it has been "fixed" to make all versions more "windows friendly" at the expense of features that may be better on other platforms (i.e. scrap the Mac interface, kill open protocols, replace working code with .net tech, etc.).
Then after a few months of user complaints there will be MS's product performance review, since after alienating the Linux and Mac folk, they will declare there is no viable market for those platforms any more and close those divisions and thus drag it into the Windows only division.
Yep, I've been around for several of those (FoxBase/FoxPro, Bungie Games, Flight Simulator, etc. to just name a few) - if they were selling a shirt about it I'd have already worn it out.
So the protocol is already OK, the client however they'll convert it to using as many Windows specific technologies as possible.
That may be true, but in my experience, I could barely get skype running on an old windows box: it would routinely grind the system to a halt. In 2010 I switched to that box to SuSE 11, where Skype, though a bear to set up, ran smoothly, with a non-noticable frame rate and better-than-TV graphics on old hardware (circa 2003 2GHz Dell with 1 GB RAM. It did that while providing NFS filesharing to another computer playing movies and a laptop playing audio.
The audio setup hassle had all the features of any other sound setup headache in Linux. I lay that problem squarely in the lap of the Linux sound community.
By purchasing Skype, MS could bring Skype to WP7 and offer it preloaded.
There used to be a time when MS could get traction simply by bundling their product everywhere. A competitor like Skype would be abandoned simply because they couldn't outspend MS. Imagine, $7b is a lot of money. You can give away $1b of free calls to get Live Messenger kick started, or run Lync for free. MS has lost that swagger that used to create their own reality.
I agree that FaceTime sells Apple hardware, but I think the hardware they want to sell is the iOS product line. Weigh how many Mac sales the will lose if people can get FaceTime on a PC against how many iPhone and iPad sales they will make to people who can now chat with Grandma on her PC?
Ubiquity on the desktop and exclusivity on the mobile device are wins for FaceTime just as they are wins for iTunes.
Having said that, Skype showed that they could make it work.
Apple's valuation today is based on its growth trajectory. This means growing their customer base and engaging in hand-to-hand combat for existing PC users to move to the Apple platform. In some way, Apple's hands are forced.
That being said, this is a guess and that's why I said I would bet on it. If I knew for sure, it would be unethical to bet on the outcome!
That is why I agree that both Apple will eventually release FaceTime on Windows, and why Microsoft will do everything they can to keep Skype multiplatform
http://projects.gnome.org/evolution/
From what I've heard, it's not always plug-and-play to set up, either. (Calendaring support in particular.)
b) Individually, not terribly likely. Collectively? Sure. (And it's $35M each, but the exact number isn't the point - let's say you could offer every ycombinator and techstars startup an average of $35M each, you'd likely end up getting two or three Dropbox-esque gamechangers, a few dozen decent products, and 150 otherwise good ideas folded into MS and dead-ended.)
They stay with the MS product line happily perhaps, or they go to __________?
gChat/open/xmpp? Jump all the way to Apple FaceTime (seems a far jump). Or with forthcoming p2p flash video ease-of-dev/ease-of-use, does this all just become super common/easy to access?