Why Did MSFT Buy Skype?

Why did Microsoft drop $8.5 billion on Skype?  Are they that terrified of Google Voice that they’ll drop major change on an acquisition they don’t really need?  The deal is ridiculous and upside down and backward.  What was Ballmer thinking?  Is MSFT really going to embed Skype in their products, or was this a proactive buy that leads to a mercy killing?

The deal will give Microsoft a boost in voice and video communications, allowing the company to leverage Skype’s technology on platforms including Xbox 360, Kinect and Outlook. It may also help Microsoft’s fledgling mobile telephone offering, which lags far behind Apple’s iOS and Google’s Android operating systems. In 2010, Skype users had 207 billion minutes of voice and video conversations. …

Despite its popularity, the service has struggled to maintain profitability. Since most of its services are free, Skype makes much of its income from a small group of users who pay for long distance calls to telephone numbers. In 2010, Skype recorded $859.8 million in revenue but reported a net loss of $7 million, according to a filing.

I’m not a big fan of Skype — but I am a Mac man — and MSFT buying the premier VOIP client for the Mac is a devastating blow to Apple fans.  FaceTime is nowhere near as powerful as Skype — even though it should be — and with Microsoft’s terrible history of properly supporting the Mac, the future for Skype running on Apple boxes is dim and dreary.

I’m still trying to figure out MSFT’s play here.  I don’t believe they are truly interested in Skype as a product.  They’re interested in Skype as a headstone and they plan to kill Skype so nobody else can have it; but spending $8.5 billion just to make something die seems perverse and irresponsible. Maybe we’ll be surprised by Redmond, but I doubt it. This Skype deal is even more evidence that Microsoft is nothing but lost without Bill Gates.

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